EUROPE – New York based currency manager FX Concepts has launched two new Luxembourg listed euro-based overlay funds, through which European investment managers can hedge their currency risk on US dollar and Japanese Yen denominated investments.
The new funds, one managing a short euro/dollar exposure and the other a short euro/yen exposure, are designed to give managers a high level of participation in the overlay programme – up to 25 times equity – without tying up significant amounts of cash. They are measured against an unhedged benchmark and come with a guaranteed 4% stop-loss versus benchmark.
“With the dollar trading near its long-term highs against the euro, this is an excellent time for European fund managers to consider putting such a currency overlay programme into place” says Daniel Szor, head of European marketing for FX Concepts.
He adds that the programme is wrapped into a Luxembourg-listed fund because that way it can be more easily integrated into fund managers’ overall portfolios than into their individually managed accounts.
The funds will be managed from New York but marketed by FX Concept’s Paris office. “We are marketing the funds from Paris because Paris is central to the Euro-zone and they were designed in conjunction with one of our French clients,” Szor explains.
Szor says that FX Concepts expects to widen the range of the programme once the new dollar and yen funds are established. “We took a simplistic view of the world for this initial foray into the euro-based investment market. We anticipate a good 75% of the business to be hedged against the dollar. Longer-term, we may develop funds that hedge against other major currencies, such as Swiss francs and sterling, to broaden the range,” he says.