EUROPE - INVESCO has rolled out a currency overlay product aimed at pension funds and other institutional clients.
Although INVESCO has provided currency overlay services for in-house mandates since 2003, they have recently began offering currency overlay as a stand-alone alpha generation product, said Ulrich Leuchtmann (pictured), foreign exchange manager for INVESCO.
INVESCO currently manages about a dozen clients and e3bn in currency overlay out of its Frankfurt and London offices. Of that number, one client has joined INVESCO with a stand-alone currency overlay mandate, Leuchtmann said.
Demand for the new product should be fuelled by the integration of UCITS III legislation, Leuchtmann noted.
“The landscape has shifted with UCITS III three legislation, which clients have begun to adopt since the beginning of this year,” he said. “But there are still difficulties on the organisational side of pension funds and fund managers. For example, in Germany, you have the KAG structure, which has to be able to incorporate currency overlay into the setting with performance attribution and so on. There are clients that want to pick it up, but the problems are on the organisational side.”
INVESCO has a discretionary investment process for currency overlay, in which “independant decision makers are responsible for different sub-alpha sources within the currency overlay process,” he said.
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