Currency Overlay and Share Class Hedging services

As the number of queries from investors and Asset Managers related to Share Class Hedging and FX Overlay structures is increasing, it is crucial to clearly identify the different factors impacting the performance of hedged share classes and portfolios.

We recently explored these challenges of the FX hedging market with three industry participants in a roundtable published in our Performance magazine.

Furthermore in the coming months, new ESMA guidelines on UCITS share classes could come into force making sure Management Companies have the share class hedging process under control. With Deloitte Hedging Analytics, Management Companies can fully rely on Deloitte to make sure that the oversight of the hedging and its thresholds are monitored and reported independently.

An external and independent view might shed a new light on the best practices of the market related to the hedging processes. Moreover, our services go well beyond the analysis and recommendation phase and extend to the implementation phase and post-implementation risk monitoring.

We provide a broad range of services to respond to your hedging challenges:

• Assistance in the RFP for the selection of hedging services provider
• Review of the hedging structures, processes and Target Operating Model

• Benchmarking of the hedging process and policies with gap analysis and peer study
• Independent certification of the performance of a hedging strategy
• Re-definition of the hedging process based on identified recommendations
• Review of the pricing and revenue strategy regarding FX products – Focus on FX transparency, market practices and regulatory requirements (e.g. MiFID II)
• PMO Assistance in the implementation of new FX processes or pricing policy
• Broad regulatory assistance on FX and share class hedging matters

For the following structures:

• Share Class Hedging with NAV Hedging
• Look-Through Hedging
• Double Deckers / Triple Deckers
• Active/Passive FX Overlay
• Duration Hedging at portfolio/share class level
• Delta Hedging at portfolio/share class level
• Benchmark Hedging as currency neutralisation or as pure replication of the benchmark hedging methodology
• Other hybrid structures