In a year when the world's biggest hedge funds are suffering losses and closures, one asset manager is trouncing rivals by betting on currencies—without taking a view on their direction.

Quaesta Capital AG, a hedge fund based in the Zurich area, runs a $420 million foreign-exchange options program that earned 21 percent this year through Nov. 11 by wagering on volatility, according to Thomas Suter, the company's chief executive officer. It's the top performer among 15 programs tracked by the Parker Global Currency Manager Index, which lost almost 2 percent in that period.

The strategy, dubbed v-Pro, has profited by speculating that swings in major currencies will grow more pronounced as the Federal Reserve moves to lift interest rates from near zero. It's the only strategy in the Parker index that focuses on volatility, which has rebounded from a record low set in 2014. Quaesta uses dynamic delta hedging—a wager on volatility that requires constant adjustments to make sure it avoids taking a stance on foreign-exchange movements.