currency trading

Currency investment manager Overlay Asset Management (OAM) has launched two currency funds: the SingleHedge Currency Options Fund and SingleHedge Multi-Strategy Currency Fund.

The SingleHedge Currency Options Fund aims to achieve capital growth by taking active positions on currency volatility in addition to the direction of spot foreign exchange rates. A discretionary strategy, it is managed by Xavier Lefevre, head of portfolio management and trading.

OAM expects the fund to be attractive to institutional investors, delivering returns with a low correlation to the majority of currency funds.

The Multi-Strategy Currency Fund is a feeder fund seeking to deliver strong risk-adjusted returns through exposure to three underlying currency programmes managed by OAM. These are developed markets diversified program, emerging markets currency program and the aforementioned currency options strategy.

The developed markets diversified program, launched in April 2003, invests in seven developed markets currencies (US dollar, euro, yen, sterling, Swiss franc, and Canadian and Australian dollars. It currently represents around 97% of the developed market currency trading volume

The emerging markets currency program, launched in November 2007, invests in US dollar and euro as well as emerging markets currencies deemed sufficiently liquid by OAM's investment team. These include Argentina, Brazil, China, Czech Republic, Hungary, India, Indonesia, Korea, Mexico, Peru, Philippines, Poland, Romania, Russia, Singapore, South Africa and Turkey.

Investments into the underlying strategies are made through zero-fee share classes. There are no layered fees.

The currency options and multi-strategy currency programs are also available as segregated managed accounts, with risk parameters and return targets tailored to the client.

The currency options fund has sterling, US dollar and euro share classes and will trade foreign exchange spot, forwards, swaps and options, including vanilla and complex ones as well as cash management instruments. Redemption is weekly.

The fund, domiciled in Ireland and listed on the Irish Stock Exchange, began trading in June and has a net cumulative performance of 1.88%.

Maximum ex-ante volatility is 25% a year.

The multi-strategy currency fund also has three currency share classes (sterling, US dollar, euro) and trades the same instruments as the currency options fund. Net cumulative performance since inception in June is 42%. Like the currency options fund, this one also offers weekly liquidity and is listed on the Irish Stock Exchange.

Maximum ex-ante volatility is 25% a year.

Overlay Asset Management is the BNP Paribas Investment partner that specialises in currency management. Established in 1998, it provides currency management services including currency alpha program as well as active and passive currency hedging services to institutional investors. At August 31, 2009, Overlay Asset Management managed over £11 billion in client assets.