Award-winning currency management
Metzler Currency Management has continually sharpened its currency expertise over the years. Areas of focus include in-depth consulting services and systematic currency management solutions powered by quantitative trading models. As an integral part of the bank, Metzler Currency Management can rely on an excellent in-house infrastructure for the trading and settlement of foreign exchange transactions.
Efficient Currency Program
The Efficient Currency Program is a centralized currency management service for clients with substantial foreign currency risks. The objective is to provide an effective and cost-efficient management of currency risks as well as to optimize the trading process for all foreign exchange transactions. Outsourcing currency management enables a clear distinction of responsibilities and lays the framework for significant cost reductions. With the scope of a currency management mandate, Metzler can also act as a collateral manager.
- One central partner for everything currency-related
- Creates clear responsibilities and simplifies performance attribution
- Complete transparency of all currency risks and foreign exchange transactions
- Best execution and exploitation of netting opportunities for a significant reduction in transaction costs
- Centralized collateral management reduces collateral requirements
- Improved overall performance due to professional currency management
Systematic Currency Overlay
Our Systematic Currency Overlay is a dynamic hedging strategy for foreign currency exposures. The objective is to limit currency losses while simultaneously exploiting opportunities to participate in positive exchange rate developments. Systematic Currency Overlay is based on a quantitative multi-model system with an excellent real money track record.
- Diversified hedging strategy with an excellent real money track record for risk-adjusted excess returns
- Asymmetric opportunity/risk profile due to mitigation of negative cash flows from forward contracts
- Reduced collateral requirements
- Specialized team composed of eight overlay managers and six FX traders with an average of 20 years of market experience
- Implementation under Solvency II and hedge accounting possible
FX Protected Carry
FX Protected Carry is our systematic investment strategy dedicated to generating risk-adjusted returns. The strategy invests in the five most attractive high-yielding currencies in order to simultaneously take advantage of both higher interest rates and a more favorable liquidity compared to physical bonds issued in high-yield markets. The currency positions are funded dynamically in US dollars and euros. The foreign currency risk is managed by Metzler's proven Systematic Currency Overlay.
- Attractive risk premia (interest advantages) for high-yield currencies
- Low transaction costs compared to local currency bond trading
- Low counterparty risk in currency trading due to daily collateral management
- No issuer risk in high-yield bonds
- Rapid closing of carry positions by Metzler Currency Overlay in times of rising risk aversion
- Opportunity for additional returns through a dynamic management of the funding currencies (EUR or USD)
The strategy was launched in March of 2017 as a mutual fund (UCITS) ART Metzler FX Protected Carry. The portfolio management company is Universal Investment GmbH:
FX Protected Carry can also be described as a speical AIF or a managed account.
Award: Currency Manager of the Year 2020
In 2020, Metzler Capital Markets was named “Currency Manager of the Year” at the 13th annual “European Pensions Awards” ceremony in London. The event honors investment firms, consultants and service providers from all over Europe who have set professional standards in order to best serve European pension funds in times of increasingly challenging market conditions. This is the second time Metzler Capital Markets has won this award since 2017.
Please read more about the Award Currency Manager of the Year.
Metzler Risk Overlay
Metzler Asset Management offers risk overlay strategies for investors seeking dynamic risk management beyond currency management. A disciplined and systematic risk management allows managing complex portfolios with a variety of asset classes efficiently and performance oriented.