HSBC has launched an analytics tool aimed at improving the effectiveness of foreign exchange (FX) hedging strategies for institutional investors.
Named FX HEAT (Hedge Efficiency Analytics Tool), the next-generation data service gives asset managers and institutions automated access to independent analytics reports.
The analytics include an overview of the performance divergence contributors between currency hedged and non-currency hedged investment returns, including market-driven and operational factors.
The launch of the service comes as buy-side firms look to outsource further components of their investment operations, including some areas of the front-office and FX desk.
“HSBC is one of the world’s largest custodians, providing asset owners and managers with access to our market-leading global FX business to manage the currency risk in their portfolios. FX HEAT will help our clients improve the efficiency of their operations with independent hedging efficiency analytics,” said Sebastien Danloy, global head of asset owners and managers, markets and securities services, HSBC.
The bank said that through using the tool, FX clients will be able to make decisions on optimising the FX hedging efficiency of their investments, a process which it added was essential during recent market turbulence.
“Investors want more clarity than ever before during uncertain times. They want to understand the costs and the risks associated with currency hedging for their fund portfolios,” said Vincent Bonamy, global head of intermediary services for markets and securities services at HSBC.
“FX HEAT can help clients strengthen their own internal governance with independent oversight of their FX strategies’ performance.”
FX HEAT also allows users to assess HSBC’s FX hedging strategies and their impact on returns on an ongoing basis and is set to be integrated into HSBC’s single dealer FX execution platform, HSBC Evolve, by the end of 2021.
Last month, Northern Trust reported a significant uptake of its FX currency management services after expanding multiple asset servicing mandates with buy-side clients over the past year.
The Chicago-based custodian said it had onboarded the likes of European asset managers Blackwall Capital Investment, Kieger and TT International Asset Management, while also expanding its existing mandate with The Asset Management Exchange (AMX) and Rockefeller Asset Management.