Insight has pioneered the development and delivery of high-quality risk management solutions to the global institutional market, built upon our market-leading fixed income and derivative overlay expertise.
We manage over $1 trillion in derivative overlay mandates for institutional clients, helping them manage pre-existing risk and to gain synthetic exposures across currency, equity, credit, interest rate and inflation markets. These capabilities can also be applied to tactical asset allocation overlays and asset rebalancing.
Our success is evidenced through the advocacy of consultants, industry bodies and our clients. We are recognised for our portfolio management capability, our comprehensive risk control process, our proactive engagement on solution design and our partnership with clients to help develop their strategies as their goals and needs evolve.
Managing all aspects of risk across your portfolio is key. We have been managing custom derivative overlay programmes since 2005. Our solutions cover risk factors across multiple asset classes including rates, equity, credit, inflation and currency, and can be executed as full hedges or as tail-risk strategies.
Our clients include a wide range of institutional investors, including pension funds and insurers, with 45 clients in customised equity overlay strategies.1
Overlays require only a portion of total market exposure to be set aside initially, allowing you to hedge risk while leaving assets free for other purposes.
Reduce hedging costs
We can help you maintain the integrity of your hedges at a lower cost, exploiting the variability of instrument prices through our dynamic hedging strategies.
Modify asset profiles efficiently
Overlays can help you adjust your assets on an ongoing basis to better reflect your desired asset allocation more swiftly and cheaply than through trading physical assets.
Manage overall exposure
Overlays can help target and modify total exposures across multiple portfolios – even if they are managed by different asset managers.
Currency risk management and alpha solutions
We are specialists in constructing tailored risk management solutions that accommodate clients’ objectives and constraints, utilising our hedging approach in multiple ways. Whether you are seeking to passively hedge currency exposure, or to generate alpha for currency markets, we can develop a solution that supports your goals.
Developed market currency solutions Read more Read less
Emerging market currency solutions Read more Read less
Currency alpha solutions Read more Read less
Insight provides solutions for developed market currency exposure management, ranging from simple passive hedging to more complex strategies. We can achieve different objectives and utilise multiple layers of risk management.
Clients can opt for a passive approach that adopts a fixed linear hedge over their underlying foreign currency denominated assets, eliminating all or a fixed portion of currency risk. This suits low-volatility assets where all currency risk is removed, such as in global fixed income portfolios.
Clients can adopt a more active approach that seeks to create an asymmetric payoff from currency risk. Here, the objective is to bound the downside to a maximum loss from foreign currency depreciation, while maximising the upside of foreign currency appreciation.
We aim to capture the long-run real appreciation we expect in emerging relative to developed market currencies, as emerging economies realise relative productivity gains.
For Australian investors, the Australian dollar’s link to global growth through commodity channels has historically led to a very high correlation with emerging market currencies.
Insight’s approach to managing emerging market currency risk is to:
- maintain strategic exposure to emerging market currencies
- manage the risk associated with the implied short exposure to the Australian dollar by diversifying that exposure into a basket of developed market currencies
We believe AUD-based investors can benefit from emerging market currency appreciation with a more sophisticated approach to currency management, which seeks to reduce the concentration of their base-currency-specific risk.
Insight can satisfy a risk-seeking absolute return objective within the currency hedging solution. If the client specifies a benchmark relative return objective, then we configure the solution with our Quantitative Currency for Return process. This can be used in isolation (to generate alpha) or in parallel with the linear passive hedge or an asymmetric hedge.
Our currency alpha process is a factor-based, quantitative strategy focused on identifying reliable, repeatable risk factors that can be exploited to pre-position for currency movement.
An example of an application of our Quantitative Currency for Return capability is when we combine
- a passive managed currency hedge over a client’s pre-existing currency exposures, plus
- Quantitative Currency for Return (alpha) process managed to a tracking error target
Combining the passive hedge with an alpha objective is a capital-efficient means of aiming for two objectives within one currency overlay – establish and maintain a strategic currency hedge and achieve some additional return.
Read our white paper A factor-based approach to currency management for further information.
Year we started actively managing currency risk for our Australian clients
Managed for Australian investors in currency risk management2
Investment professionals in global currency solutions team1
Assets managed by the global currency solutions team2