bulletEDITOR'S PICKS

 

Skandia finalises rebrand as Old Mutual International

From Life Dec 22 2014 @ 06:01

Offshore savings and investment firm, Skandia International, has completed its rebrand as Old...
view article

Bond portion control – Technical briefing

From Tax & Technical Dec 17 2014 @ 05:18

A bond’s ownership structure can be adapted, futureproofing a family’s investment as their needs...
view article


bulletRELATED ARTICLES

 

bulletNEWS

 

LATEST NEWS

Skandia finalises rebrand as Old Mutual International

Skandia finalises rebrand as Old Mutual InternationalOffshore savings and investment firm, Skandia International, has completed its...
view article

IFAs: Support trade associations or jeopordise...

From Analysis Dec 19 2014 @ 11:48

Gov't proposes FCA enforcement overhaul

From Tax & Regulation Dec 19 2014 @ 11:46

MORE FROM Life

LATEST NEWS

SLI global expansion set to continue into 2015

SLI global expansion set to continue into 2015Standard Life Investments will continue its global expansion in the New Year with...
view article

Axa agrees sale of Romanian business

From Europe Dec 19 2014 @ 04:00

HK firms must fix failures in sale practices...

From Asia Dec 18 2014 @ 15:57

MORE FROM United Kingdom

LATEST NEWS

Rysaffe set to continue following Gov’t multiple trust U-turn

Rysaffe set to continue following Gov’t multiple trust U-turnThe Rysaffe principle still stands as the Government’s draft finance bill omits an...
view article

JPM AM acquires Aviva Investors Asia Pacific...

From Asia Dec 18 2014 @ 14:10

Jailed IFA banned from industry

From United Kingdom Dec 18 2014 @ 11:13

MORE FROM Tax & Regulation



'New currency unit' unveiled by FTSE Group

From Products Feb 22 2012 BY: Helen Burggraf , Contributing Editor , International Adviser

Add to My News Comments (0)

Add to My News Print

Add to My News

add to twitter

add to linkedin


A new "currency unit" has been unveiled that its creator, the FTSE Group, says is is designed to enable investors to preserve their wealth by protecting them from currency and inflation risk.

The so-called "wealth preservation unit", or WPU, is essentially a basket of eleven currencies and two commodities – gold and oil – which is seen as enabling investors to hedge their currency exposures.

Ronald Liesching, chairman of Mountain Pacific Group, a US-based currency firm which was involved in helping FTSE Group with the creation of the new WPU, said in a statement accompanying the unveiling of the new currency unit that currency risk is "likely to be the single largest risk confronted by today's global institutional investors".

In the same statement, the FTSE Group, which is best known for its stock index business, and which is owned by the London Stock Exchange Group, said the WPU had been conceived in response to the investment challenge presented by currency swings over time, coupled with the problems paper currencies face as purchasing power becomes eroded by inflation.

"In response to this investment challenge, and in consultation with Mountain Pacific, FTSE WPU provides investors with a transparent and reliable tool which aims to mitigate both risk of loss arising from changes in relative valuation in currencies, as well as internal loss from inflation erosion of purchasing power, in order to preserve wealth over the long-term," the FTSE Group said.

'Developed, emerging currencies, storable commodities'

The WPU is constructed from a combination of developed currencies, emerging market currencies and what are described by FTSE as "storable commodities".

The world's seven largest currencies are included among the eleven, with the US accounting for the biggest weighting in the currency basket; the other six of these are the euro, British pound, Australian dollar, Japanese yen, Swiss franc, and the Canadian dollar. The other four so-called "emerging" currencies are those of Brazil, Russia, India and China.

"Each component within this multi-asset solution mitigates a particular source of risk; diversification of foreign currency exposure across developed currencies, hedging power risk against BRIC currencies, and hedging inflation risk through exposure to commodities.

"FTSE WPU is designed to maximise risk for investors, and exhibit greater stability than any single currency."

Whether the WPU will catch on among investors will, experts say, be interesting to watch. Until now, investors have shown little interest in currency baskets, preferring to, effectively, create their own as needed.

Perhaps the best known is the SDR, or special drawing rights, which was conceived in 1969 by the International Monetary Fund, but historically has found few takers outside of governments. Another is the USDX, or dollar index, which is a basket of currencies that does not include the US dollar (euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc).

To view a fact sheet on the new FTSE WPU, click here.

Add to My News Comments (0)

Add to My News Print

Add to My News

add to twitter

add to linkedin


COMMENTS


Have your say

(Be the first to) Have your say!

Please sign in or register here to leave a comment. Registration is free and only takes a few moments.






Share us on Twitter

SHARE US ON TWITTER
Join the community

Join us on Linked In

SHARE ON LINKED IN
Inform your colleagues

Switch to our mobile site

SWITCH TO MOBILE SITE
News on the go

Back tot he top of the page

BACK TO TOP OF PAGE
Just click here...