Share Class Hedging
Hedging the currency risk between the base currency of a fund and that of the investor,
- to attract new investor groups in foreign markets using their domestic currency and offer a currency hedged investment return - used by Investment Managers to seek additional capital into funds
- to offer flexibility to investors with a choice to select the investment hedged in a currency of choice
Through the use of efficient hedging models, the programme looks to mimic the benchmark / base class of the fund and minimise any tracking error as much as possible. These can be performed at investor level but also in the form of look through hedging, whereby a secondary step is taken to ‘look through’ the portfolio to ascertain the required hedge ratios based on the underlying foreign currency exposures. Another alternative is to use benchmark methodology and index/basket currency weights.