Buy-side firms often separate the management of currency
risk from asset allocation and security selection
decisions and therefore manage currency hedging implementation
as a separate operational process. This can result in
implementation blind spots. Most buy-side firms focus their efforts
on optimizing the hedge ratio and strategy decisions based on
forecast movements in exchange rates, valuation, interest rate
differentials, and other perceived risk factors.
The sell-side's focus on spot forecasting, minimization
of self-executed spot transaction costs, targeting hedge
funds, and high turnover speculators have resulted in
blind spots and leakages in the buy-side implementation
process that could be mitigated through a
better understanding of currency as a risk asset class.
This article highlights critical implementation and risk
considerations that are often misunderstood by buyside firms
in fulfilling their fiduciary responsibilities.
This article contains general information only, and none of
the Deloitte entities belonging to the Deloitte Network is, by
means of this article rendering accounting, business, financial,
investment or other professional advice or services. This article
is not a substitute for such professional advice or services, nor
should it be used as a basis for any decision or action that may
affect the reader's finances or business. Before making any
decision or taking any action that may affect the reader's
finances or business, the reader should consult a qualified
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
With effect from 18 April Jersey is introducing a new regime in respect of private funds - simplifying the regulatory regime, and extending the benefits of flexibility and speed across Jersey's private funds space.
The Hedge Fund Law Report recently interviewed Woolverton in connection with his move to DMS, during which he discussed the role of robust fund governance in the context of private funds.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).