Dynamic hedging

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Our dynamic hedging solutions seek to mitigate the adverse impact of domestic currency strength on portfolio returns, while maintaining exposure to the supportive impact of domestic currency weakness.

In other words, we aim to introduce asymmetry in currency returns.

Our approach to delivering a bespoke dynamic hedging solution is usually quantitative in nature, fully modular, and relies on two key components:

  • Currency Risk Management (CRM) is our core hedging engine. This component is akin to an insurance policy and serves as a tail hedge instrument to protect against adverse currency moves
  • Alternative Risk Premia (Alt Risk Premia) is our return-seeking engine and is designed to improve the expected return of the combined dynamic hedging strategy

The optimal combination of these two components is driven by our clients’ objectives – balancing expected returns versus the need to protect against adverse currency moves.

Our solutions can be tailored to a client’s specific asset allocation and risk tolerance while delivering against multiple goals.

Furthermore, the breadth and depth of our expertise allows us to support our clients by providing bespoke analysis, thought leadership/white papers and market commentary.

Currency solutions in numbers

  • 1991 Year we started actively managing currency risk for our clients
  • 24 investment professionals with 20 years' average industry experience
  • £48.4bn assets managed by the Currency Solutions team

As at 31 March 2022. Assets under management (AUM) are represented by the value of cash securities and other economic exposure managed for clients including active discretionary assets which include the value of fixed income strategies with an active currency overlay.

Important information

The value of investments and any income from them will fluctuate and is not guaranteed (this may be partly due to exchange rate fluctuations). Investors may not get back the full amount invested. Past performance is not a guide to future performance.

Currency hedging techniques aim to eliminate the effects of changes in the exchange rate between the currency of the underlying investments and the base currency (i.e. the reporting currency) of the portfolio. These techniques may not eliminate all the currency risk.