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Case Study Overview
Our client is a long short equity fund with share classes in GBP, EUR, USD and CHF – predominantly they invest in pan European equity markets, but also have a remit to invest in selected EM’s providing strict risk and value preservation models are adhered to
Assets Under Management
$600m
Assessment
the fund is using prime brokerage for all execution services across equities, FX hedges and FX deliverables. PB is responsible for executing on instruction, but gives no input to optimisation. Pricing is competitive, but as execution only there was no potential for improvements unless the fund can identify them.
Proposal
We proposed an unsecured FX facility, allowing for no initial collateral to be placed against trades. This has a positive impact on their wider revolving credit facility utilisation, which in turn increased the investment headroom. Additionally we now optimise the tenors on some of their swaps to increase yields where possible and practical – taking possible redemptions into account.
Outcome
Our client now has an active, optimised FX strategy and greater headroom within their RCF, allowing for more funds to be deployed, aiding their internal rate of return.
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