FX Debate: Executive summary Part Two

January 30, 2007

• Investors are taking increasing advantage of offerings that combine passive FX hedging and absolute-return strategies

• Highly leveraged FX funds are becoming increasingly prominent in the market

• Value-added investment strategies can spring as much from hedging existing risk as from taking on new risk

• Currency overlay strategies can shade imperceptibly into leveraged investments

• FX derivatives are gradually spreading from hedge fund investors to those seeking conventional hedging of risk

• Use of prime brokers, as opposed to custodians, is spreading to real money managers

• Best execution is hard to demonstrate in FX, but investor demand for benchmarking is meeting with a response