FTSE Group (“FTSE”), the award-winning global index provider, today announces the launch of the FTSE Wealth Preservation Unit (WPU), a stable global currency unit which aims to allow global investors to preserve wealth over the long-term by providing protection from currency and inflation risk.
Currency exposure is an unplanned consequence of international asset allocation but currency swings can have a large impact on wealth. In addition, paper currencies risk the loss of purchasing power as inflation destroys wealth. In response to this investment challenge and in consultation with US currency firm Mountain Pacific Group, FTSE WPU provides investors with a transparent and reliable tool which aims to mitigate both risk of loss arising from changes in relative valuation in currencies, as well as internal loss from inflation erosion of purchasing power in order to preserve wealth over the long-term.
FTSE WPU is a single currency unit constructed from a basket of developed currencies, emerging currencies and storable commodities. Each component within this multi-asset solution mitigates a particular source of risk; diversification of foreign currency exposure across developed currencies, hedging buying power risk against BRIC currencies, and hedging inflation risk through exposure to commodities. FTSE WPU is designed to minimize risk for investors and exhibit greater stability than any single currency.
Ronald Liesching, Chairman of Mountain Pacific Group comments: “Currency risk is likely to be the single largest risk confronted by today’s global institutional investors. FTSE WPU uses the principal of diversification to achieve a more stable long-term store of global value than any single currency.”
Reza Ghassemieh, Managing Director, Head of Research and Analytics at FTSE Group comments: “FTSE is proud to provide investors with a unique solution to this global investment challenge. We believe FTSE WPU can be applied to a range of investment needs from institutional investors seeking to mitigate the impact of currency swings to investment managers who can hedge funds into FTSE WPU for broader global appeal.”
FTSE WPU has been designed with input from market participants including global banks, institutional investors, high net worth investors, central bankers, and investment consultants, and is managed by an independent advisory committee of industry experts.