Currency Overlay Management

Currency risks are generally the unintended but unavoidable by-products of global investments.

Since the currency risk taken is not rewarded by a risk premium, a systematic FX management makes sense.

Currency management is the management of currency risks in isolation from the base investment. The aim of every currency hedging strategy offered by 7orca is to control and optimise the risk/return profile according to the client’s individual requirements.

7orca is an expert in passive and active currency overlay

  • Passive currency overlay
    The primary objective of a passive strategy is to reduce the risk of loss resulting from the foreign currency by minimising currency-related volatility. 7orca’s systematic tenor management allows hedging costs to be minimised.
  • Active currency overlay
    7orca’s proprietary quantitative investment process provides for the systematic and dynamic adjustment of the hedge ratio to the prevailing FX market environment.
    This way, we not only achieve a high hedging efficiency for our clients, but also an asymmetric risk profile: they can participate in rising foreign exchange rates and are hedged in case of adverse price developments.

Your universal and specialised currency overlay manager


7orca is the sparring partner for its clients in all currency matters. The professional currency manager optimally controls foreign currency risks and at the same time enables the portfolio managers of the base investments to concentrate fully on their specialisation.

Once we have created a transparent and flexible set-up for the management of foreign currency risks, the mandate can be adapted quickly and easily to changing conditions – whether it is a reallocation of the base investments or a modified hedging strategy.

Central cash management for the hedging transactions allows this in the portfolio segments to be reduced to a minimum and also avoids unnecessary transactions for the procurement of liquidity.

We achieve significant economies of scale through the holistic analysis and management of currency risks across all portfolio segments. These arise when the foreign currency exposure increases in one segment and decreases in another. Netting can significantly reduce transaction volumes and thus costs.

Customised currency overlay, tailored to your needs

The optimal design of the currency management is as individual as the portfolios to be hedged. For this reason, 7orca performs a full currency inventory as a first step. In a currency workshop, we develop your customised hedging strategy together with you.

Currency Overlay Managing foreign exchange exposures systematically Analysis and Advice As-is analysis and derivation of recommended actions Calculation of economic currency exposure using look-through and re-mapping Identification of a client-specific benchmark concept by taking individual conditions into account Investment Process Investment process to guarantee a steady hedge ratio Model-based, active investment process for dynamic hedge ratio control Definition of optimal hedge terms Setting individual deviation bands and using netting effects Individual Implementation of the Mandate Selecting the appropriate hedging instruments (FX futures vs. FX OTC forwards) Optimisation between foreign currency procurement and overlay programme Advice on optimal structure (costs, supervision, regulations, complexity) Reducing transparent and non-transparent transaction costs Preparation of client-specific FX reports

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