Multi Currency Investment Strategy to reduce risk

Background

Our client, like many expats, had settled in one country but was not sure if work would take her to another country.  She also felt that she might eventually like to return to her home country although this was by no means certain.  The client was able to invest from the proceeds of her business dealings which was an international business.

Her investment risk profile was cautious.

Solution

In this case the business earnings were in dollars, euros and sterling.  She lived in the Euro area, may have to move to the UK for business and her original home was in a dollar based economy.  As funds became available for investment the most normal arrangement would have been for this client to have a single currency plan in Euros because this is where she is living.

We identified that with this client's uncertainty, moving money from dollars into euros and possible on into sterling was going to be costly.  Also it meant that there was a risk the currency would move against the client resulting in a loss.

We therefore established a multi currency investment within a fully Spanish compliant insurance structure for her so that her dollar earnings could go into the dollar section, the euros stay in euros and sterling stay in sterling.  This was not a simple bank account but a full investment vehicle allowing her to maximise her investment returns.  This approach removed the currency risk for her and gave considerable piece of mind by resolving one major uncertainty. 

Post Script  The recent fluctuations of all three currencies have shown the benefit of this approach.

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