Currency management

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Institutional clients typically have different objectives for the introduction and maintenance of currency exposures within their investment portfolio. These could be aligned to return-seeking, diversification or risk management objectives.

Our solutions-based approach starts at the planning stage by helping our clients formulate and define their currency objectives; we then design a currency programme tailored to achieve those objectives.

Over the years we have developed quantitative tools and applications in a modular format which enable flexibility in the design stage of the solution and provide transparency in our active management of the currency programme. Our currency solutions are available to institutional clients in a separately managed unfunded derivative overlay.

Our capabilities

Developed market currency solutions

Our developed market currency solutions range from simple linear passive overlays that track a fixed target hedge to more dynamic active management of underlying currency exposures. Active management seeks to limit loss during periods of foreign currency depreciation and to increase the capture rate during periods of foreign currency appreciation.

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Emerging markets currency risk management

Emerging market currency solutions recognise that one of the key objectives of investing in emerging market bonds and equities is to gain strategic exposure to the potential appreciation of emerging market currencies. Our solution maintains this strategic long exposure, with risk management focused on short base currency exposure. This aims to mitigate loss during periods of base currency appreciation.

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Currency alpha solutions

For clients with a return-seeking objective, currency exposures can be a capital efficient way to generate returns, independent of the primary objective of holding currency. Currency alpha is typically uncorrelated with traditional asset class returns. Insight can satisfy a risk-seeking absolute return objective within a currency solution. If the client specifies a benchmark-relative return objective, then we configure the solution with a risk allocation to our Quantitative Currency for Return process, with a separate hedging process for a complete currency solution. Alternatively, clients can access the alpha process independent of any hedging requirements.

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Please refer to the underlying fund or strategy page for details of the specific risks associated with investment.