Solutions and Capabilities Currency Management

Currency Management

Credit Suisse Asset Management has been managing active and passive currency overlay mandates for institutional investors since 2002. Today, we manage close to USD 27 bn1 in tailored currency overlay and share class hedging mandates, using specialized currency risk management systems and tools.

Why delegate currency management?

A separate currency overlay can provide significant cost-saving synergies for most Swiss-based investors while also eliminating operational risks. Our dedicated Currency Management team has an average of 17 years of hands-on currency management experience combined with extensive knowledge of the Swiss market, and is supported by a large number of experienced specialists across the firm. This combination of global knowledge and in-depth local market expertise allows us to offer value-added solutions for all your currency needs, including active and passive hedging.

Competitive fees and low minimum thresholds make our solutions attractive even for small mandates.

Key figures

2002

The year of our first external currency overlay mandate

27

bn USD in currency exposures under management

17

Average amount of experience (in years) in our dedicated Currency Management team

7

Total number of currency specialists2

Client-focused approach

A delegated currency management solution begins with assessing the client’s needs. What is the optimal execution setup? Which portfolios and positions should the mandate cover? What are the properties of those positions (valuations, currency allocation, liquidity)? Which currency exposures should be hedged directly or indirectly (via proxy)? What levels and ranges of hedging does the client want? And, finally, which FX strategy should be applied (implementation-only, optimized, rule-based or active?)

Passive

Currency hedges are maintained and adjusted in line with client guidelines and the currency exposure of the underlying assets. MiFID II-compliant trading and reporting capabilities ensure competitive execution tailored to individual client requirements.

  • Share class hedging: Implementation and execution service; seeks to minimize tracking errors and reduce cost.
  • Portfolio hedging: Value-added hedging and rebalancing strategy designed for individual client needs.

Active

In addition to passive hedging, we also offer risk-reducing or return-seeking strategies designed to meet client objectives.

  • Rule-based hedging: Systematic adjustment of strategic hedge ratios based on factors that have influenced foreign-exchange rates in the past. For example, our rule-based hedging strategy provides an intuitive link between hedging cost, valuation, and hedge ratio for Swiss-based investors.
  • Active hedging: Discretionary management of hedge ratios within a given bandwidth (around the benchmark hedge ratio) based on “fair value” estimates, the behavior of exchange rates through the economic cycle, sentiment indicators, and technical analyses.
  • Currency for return: Rule-based or discretionary strategies tailored to client objectives.

Risks

  • Historical performance indications and financial market scenarios are no reliable indicators of future performance.
  • Investments in foreign currencies involve the additional risk that the foreign currency might lose value against the investor’s reference currency.
  • The return on discretionary mandates depends on the selected asset classes and correct market assessment. No capital or return is guaranteed.
  • The liquidity of the instruments depends on the product and market conditions in each case. Decisions taken by Credit Suisse may result in investment losses for the clients.