Attracting new investors is essential for the success of any fund. In the past, fund managers would often brush off questions about FX risk in relation to fund performance by stating that investors manage this risk themselves. However, recent trends have shown that this is no longer the case. Investors, particularly retirees, want the fund to manage the risk for them through a hedged class of units. This has created a new set of challenges for funds, including finding effective hedges and obtaining the Taxation of Financial Arrangements (TOFA) election. Learn more

Risk management professionals are constantly coming out with new exotic options. These options have strange names, such as ‘Seagull’ or ‘Knock-in and Knock-outs’.

Despite the exciting names, leveraged options often come with disadvantaged accounting treatment. Learn more.

The old adage, “if it’s too good to be true, it probably is,” sums up hedge effectiveness testing perfectly. If you think the process is easy and straightforward because your hedges are 100% effective, you need to look closer.

Why do FX forward contracts create unwanted P&L volatility if hedge accounting is not correctly applied? The fair value of forward FX contracts can change dramatically from month to month, especially with economic uncertainty post-pandemic.