Overlay Asset Management has launched the BNPP/OAM Wealth Preservation Currency Index, a joint initiative with BNP Paribas Corporate and Investment Banking.
The index will offer investors access to a “virtual world reserve currency” and will help preserve the purchasing power of currency allocations.
The index tracks the performance of the 15 largest currencies, representing 80 per cent of the world’s economy. Currency allocations are determined by GDP then adjusted according to purchasing power parity, which boosts the weight of emerging market currencies.
The index can be used for investment, hedging, or as a benchmark for currency exposure. BNP Paribas Corporate and Investment Banking offers access to the index via capital markets products such as swaps and options, while Overlay Asset Management will provide index overlays, funds and segregated mandates.
Hélie d’Hautefort, Overlay Asset Management’s chief investment officer, says: “WPCI goes far beyond a standard currency overlay programme by providing exposures to currencies that are not linked to an investor’s underlying portfolio. Furthermore, the relatively high allocation to emerging market currencies – currently 40 per cent of the index – taps into their superior growth potential.”
François Boisson, European head of FX sales (institutional clients group) at BNP Paribas Corporate and Investment Banking, adds: “Investors have turned to global equities, bonds and commodities to hedge against a falling dollar but often neglect the large, liquid currency markets. We believe that by using products based on the Wealth Preservation Currency Index, investors will protect against future erosion in purchasing power caused by the fluctuation of individual currencies.”