LONDON, Feb 21 (Reuters) - A big bond fund's bet against the euro that has stood since 2013 could be removed later this year if Europe navigates its way through political tests in the likes of France and Germany.
Ryan Myerberg, a portfolio manager in Janus Capital's fundamental fixed income group, which manages around $40 billion, said his fund has been underweight the single currency, to varying degrees, for around four years.
"We have a long-standing short in the euro which we are happy to wear ... it is mainly for political reasons but also we think the U.S. Fed is behind the curve," Myerberg said.
"But it could be a tale of two halves for the euro in 2017. If we get positive results in the elections in the likes of France and Germany then we would be positive on the euro again."
Myerberg said a positive result in the French election would see a centrist candidate such as Emmanuel Macron or conservative Francois Fillon defeat the eurosceptic, far-right leader Marine Le Pen in May's run-off.
He said the optimal result in Germany, which holds Federal elections in September, would be a win for Socialist Martin Schulz over incumbent Angela Merkel who has governed Europe's biggest economy for over a decade.
"A Schulz government likely entails more spending and probably a more pro-European stance. This would be very positive for European risk," Myerberg said.
A more stable political environment coupled with rebounding euro zone growth and inflation could also see the European Central Bank scale back its monetary stimulus and Myerberg said this would strengthen the euro.
Reporting by John Geddie; Editing by Alison Williams