Innovative Currency Management

The thing about capital markets is that they are global, and since time immemorial, whether it was sea shells or gold coins or today’s 180 currencies worldwide, capital has come in all shapes, sizes, and values – and is as different from one place to the next as languages and dialects.

当然，当涉及到通过投资筹集资金或提供资本时，这些市场的参与者是一群勇敢的人。在许多情况下，一个需要资金的企业不想将其投资者基础局限于那些使用本币的人。尽管如此，至少可以说，当一个投资者的基础是全球性的时，货币兑换的风险和复杂性是巨大的。

“Portfolio managers want to be concentrating on their core investment strategy, picking the right equity and fixed income instruments,” says Andy Lemon, Head of Transactional FX at Northern Trust Capital Markets. “Worrying about the uncorrelated operational cost and risk of managing currency volatility isn’t really part of that core focus, and is often viewed as an administrative burden. As such, it may not be given the level of focus that it requires. As the size and complexity of the footprint of an investor base grows into new geographies, some of these currency exchange models can become quite complicated.”

Hedging through a trusted partner

Delegating the nuances and heavy lifting of currency issues to a trusted partner allows portfolio managers to explore opportunities wherever they find them – not to mention time to explore more of them.

什么时候？北方信托Capital Marketsis that partner, as it is to many, it brings a broad range of currency management solutions to the table, to support currency management risk mitigation: unhedged share class conversion, share class hedging, portfolio overlay, and look-through hedging make up the solutions suite. Northern Trust’s flexible and scalable solutions are tailored to meet specific client needs. “Understanding the client need is one of the most important aspects of setting up a currency management program,” says Lemon.

莱蒙说：“管理货币风险的整个概念，就是要减少货币波动对投资组合和相关货币股票类别表现的影响。”。“对于管理者来说，选择是否授权给专业的供应商是一回事，但有效的监督是必不可少的，为此，你有合适的工具来完成这项工作，能够提供详细的分析，以实现一致的反馈循环。而这正是北方信托的关键特征之一。这一点非常关键，因为为管理者提供正确的工具，可以在他们成长的过程中为他们提供支持，增加他们资金的分配，并吸引更多来自新辖区的投资者。”

Going back to the basic concepts, unhedged share class conversion is a spot conversion from the share class into the fund base currency. The other three hedging techniques are more sophisticated. Take share-class hedging, for example. Suppose a manager in the UK wants to take investor inflows from the EU. They may issue a Euro-denominated share class to attract more investors. The Euro share class performance might differ from the Sterling share class – the base currency of the fund – so Lemon and his colleagues look to hedge the share-class currency back to the base currency of the fund to reduce the impact of that currency volatility, “The aim is to reduce performance divergence – and for this you need to be able to understand and analyse the key attributes that can cause divergence” says Lemon.

“The portfolio overlay for the same fund would be hedging between that Sterling base currency and the portfolio asset currency, which may be in Hong Kong Dollars or U.S. Dollars, or wherever that buyer has purchased that equity,” says Lemon.

Lemon说，透视对冲可以看作是“股票类别和投资组合叠加的组合”。“从技术上讲，您所做的是减少可能发生三角剖分的情况的影响。假设一位美国投资者通过美元股票类别投资于同一基金，该基金的40%投资于美国市场。你不需要为这40%的股票类别预订外汇，因为它已经在正确的货币。所以，你需要做的就是从美国美元的股票类投资到其他投资组合中，这可能是瑞典克朗、香港元、巴西雷亚尔等。这正是在透视对冲中创造效率的原因。”

Relentlessly striving to innovate

Accuracy and timeliness are important in the FX space, and to achieve those Northern Trust Capital Markets provides the full toolbox and skill sets. Despite its heritage, outstanding reputation, robust framework, and scale as an FX solutions provider, Northern Trust Capital Markets is always looking to up its game through innovation. In June, Northern Trust Capital Markets announced a technology partnership with Lumint, a business that provides comprehensive currency management services via a highly automated proprietary platform, including real-time performance analytics.

The Lumint partnership is yet another example of where Northern Trust is using innovative technology partners to ‘stand out from the crowd’ and address specific client needs. “It’s a competitive market out there,” says Lemon. “At the end of the day, as a portfolio manager, when you’re trying to attract investors through increased distribution, you need to focus on key skills, so when you make the decision to hedge and reduce currency volatility and decide to appoint a third party to handle this, then you want a partner whom you can rely on to do this right.”

To learn more,到这里来.