Currency Overlay Programs
Assets invested in foreign investments are exposed to currency risks which can be substantial. A.G. Bisset provides strategies to manage currency risk.
Bisset’s Active Currency Hedging Program is designed to actively place and remove hedges on underlying foreign currency exposures to permit an investor to avoid currency losses when currencies decline in value and to participate in gains when currencies rise in value. Each currency is hedged individually against an investor’s home currency.
The model-driven currency overlay program is highly disciplined and has been applied to manage currency exposures in institutional investment portfolios since 1988. The program can be applied to any base currency and against any benchmark.
Bisset’s Integrated Currency Management Program (ICMP) is designed specifically for UK-based pension funds and institutions. Introduced in 2006, the ICMP has three components that together manage the short-term currency risk, the longer-term cyclical currency risk, and the cash flow risk associated with hedges.
Versions of the ICMP are also available for dollar-based and euro-based investors.
Bisset’s Passive Hedging Program is available to institutions and hedge fund managers who prefer to have a permanent currency hedge in place on all or on a portion of an underlying currency exposure.
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Currency Alpha Programs
Bisset’s Currency Alpha Program is designed for investors interested in profiting from currency as an alternative asset class or as an alternative investment strategy.
The currency alpha program takes long and short positions in currencies to generate returns. Bisset’s currency models systematically apply our discipline to create portfolios designed to reduce portfolio volatility and to increase returns over time.
Bisset’s scaling model actively manages how much of the portfolio to invest based on its probability of success. Leveraged and unleveraged programs are available based on each client's risk appetite.
Currency provides many of the most desirable features of an alternative asset class:
- Liquidity - $4 trillion-a-day currency market
- Transparent pricing
- Uncorrelated to major asset classes – often negatively correlated to equity returns during equity market declines
The events of 2008 demonstrated that many alternative investment strategies and asset classes were more highly correlated with equity market and fixed income returns than anticipated. The addition of currency to an investment portfolio can therefore reduce overall risk.
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