Hedged Investment is an investment strategy wherein customers may generate higher yields from multi-currency instruments.
By applying this strategy, customers’ risk (e.g. currency risk) is mitigated by locking in applicable investment and foreign exchange rates.
How does a Hedged Investment Strategy work?
This strategy involves three simultaneous transactions:
1. Convert the original currency to a foreign currency through a Foreign Exchange (FX) transaction (e.g. PHP to USD spot rate)
2. Invest the FX proceeds (e.g. USD TD)
3. Convert the investment proceeds back to the original currency at a pre-agreed FX rate (e.g. USD to PHP forward rate)
Are there any costs for using the Hedged Investment Strategy?
Other than the fees that may come with the underlying investment, there are no fees applicable to customers for using the Hedged Investment (HI) Strategy. However, relevant market valuation will be applied for the termination of the HI before maturity.
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Certain investment products and hedging solutions included in this webpage may not be eligible for sale in other jurisdictions and may not be suitable for the risk profile of the recipient of the information.
The information published or included herein is for the knowledge of the customer only and should not be interpreted as an offer to buy or sell securities, currencies, and derivatives, or as an investment advice of any kind.
This webpage should not be used as the sole basis for any financial decision to invest in any security or to participate in any transaction and should not be taken as a substitute for the exercise of judgment by customers, who should obtain separate legal or financial advice.
Any investment or hedging solution is subject to different risks, with the level of risk being dependent on a variety of factors. The value of securities or portfolios may fluctuate daily, and even become valueless, ultimately resulting in customers incurring losses. This market risk and other risks inherent in the products presented in this material are deemed understood by and are acceptable to the customer. Investing in products such as bonds and different types of securities, trust accounts, and other similar instruments, does not provide guaranteed returns, and is not covered by the Philippine Deposit Insurance Corporation (PDIC).
As such, prior to engaging in any of the products offered herein, the customer should have fully understood the nature of the products and the extent of exposure to risks, and should have independently determined that the product is appropriate based on the customer’s risk profile.
BPI does not in any way guarantee the performance of the treasury products and shall not be responsible for any loss sustained except where such loss arises solely out of BPI’s acts and omissions done or suffered in evident bad faith, or through gross negligence, willful misconduct or material breach of duty or contractual obligation.
Regulated by the Bangko Sentral ng Pilipinas https://www.bsp.gov.ph SMS: 021582277 & BSP CAMS Facebook https://www.facebook.com/BangkoSentralngPilipinas and Securities and Exchange Commission. https://www.sec.gov.ph, msrdsubmission@sec.gov.ph or call 8818-7164