The Principles for Currency Management
On October 18, our colleague Elske van de Burgt presented at PMAR West in San Diego on “The Principles for Currency Management”. With the use of a practical case study, Elske demonstrated that currency exposures potentially add a lot of volatility to the portfolio with little or no risk premium. Therefore managing the currency risk is important. The PowerPoint presentation explains the underlying principles of currency risk and strategies to hedge against this risk. Also the impact this has on the performance of the portfolio and how to separate the impact from currency risk on overall performance is explained using examples. These examples range from simple base currency analysis to local return and the use of risk premiums. In addition to this more advanced approaches, like hedged returns and the measurement of currency overlay programs are addressed.