Research & Resources

The goal of a passive currency overlay is to eliminate currency-related volatility within a client’s portfolio, thereby neutralizing any potential for downside risk and upside gains due to currency fluctuations.

A dynamic currency overlay looks to limit the risks of currency exposure while also increasing the returns on an investor’s underlying portfolio.

To minimize currency risk arising from exposure to international assets, there are two solutions to consider: a passive or a dynamic currency hedging approach.

Many Swiss institutional investors routinely rebalance their foreign currency hedges at the London fix on the last working day of the month. Unfortunately, unbalanced flows as well as banks’ and speculators’ activity conspire to create a disadvantageous trading environment.

Many Swiss institutional investors routinely rebalance their foreign currency hedges at the London fix on the last working day of the month. Unfortunately, unbalanced flows as well as banks’ and speculators’ activity conspire to create a disadvantageous trading environment.

For Swiss investors, the current and unprecedented low level of domestic interest rates has dramatically raised the costs of hedging foreign currency risk. We investigate the merits and characteristics of a strategy looking to optimize these costs.