Managing Partners Capital

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Russell — Wed, 02 Jun 2010 09:35:56 +0000

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FX volatility threatens TLP funds’ liquidity

matt — Thu, 27 May 2010 09:18:27 +0000

LONDON, 06.05.10 – Funds that invest in traded life policies (TLPs) must use a blend of currency hedging solutions in order to deal with the ongoing volatility on FX markets, according to Jeremy Leach, Managing Director or Managing Partners Limited (MPL), in an address to an industry conference.

Speaking to delegates at the Insurance-Linked Securities Summit conference held at the Meridian Hotel in Piccadilly, London, Mr Leach said that chronic FX volatility now posed the greatest liquidity risk for TLP funds. TLPs are United States-issued whole of life policies sold before maturity so that the original policyholders can enjoy some of the benefits in their own lifetimes. Funds that invest in TLPs are designed to deliver smooth, predictable returns in an investor’s base currency. Because TLPs are dollar-denominated assets, this means the currency risk must be hedged for sterling and euro investors.

Mr Leach said: “The most cost-effective way to hedge currency risk is by purchasing forward foreign exchange transactions. But a ‘Forward’ either creates cash or consumes cash, depending on whether the dollar strengthens or weakens. If a currency pair, such as dollar-sterling or dollar-euro, moves significantly in an adverse way then that creates an enormous liquidity burden on a fund by eating away at the cash reserves.

“When currency pairs are as unpredictable as they are now, with the stability of sterling threatened by the prospect of a hung parliament and the euro undermined by the Greek, Spanish and Portuguese credit risks, then a blend of options and forwards are needed, especially when the volatility has been ongoing for so long.”

Forwards are a type of derivative that lock in the price at which two parties are obligated to buy and sell a specified amount of currency on a particular date and at a set exchange rate. When purchased in the correct ratio to a currency pair such as Pounds and Dollars they offset any positive or negative currency trend. Forwards are comparatively cheap to buy because they cover both sides of the trade and so they have nominal impact on net asset values.

Fund Performance

Russell — Mon, 03 May 2010 14:35:44 +0000

Please click on the logos below for detailed fund performance information:

Traded Policies Fund

2008 was particularly good for TLP funds. The sterling share class in Traded Policies Fund, which is available to retail investors, delivered 10.56% net of all charges over the year to 1 January 2009.

View TPF Fund Performance

BPOF Fund

This is a new Fund so there is no yield drag on historic investments. It offers high capital growth potential as the UK property market recovers.

View BPOF Fund Performance

The latest investment update is available on the Member’s home page, click here to register. Registered Members may log in here.

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Russell — Mon, 03 May 2010 10:14:08 +0000

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Russell — Mon, 03 May 2010 10:13:47 +0000

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Russell — Mon, 03 May 2010 10:13:22 +0000

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Russell — Mon, 03 May 2010 10:13:04 +0000

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Russell — Fri, 30 Apr 2010 07:08:02 +0000

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