Currency risk drives EU equity fund derivatives use

Abdool Fawzee Bhollah
10 Sep 2019

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Ucits equity funds are not too fond of derivatives, a study by the European Securities and Markets Authority (Esma) shows, but those which do use them mainly do so to hedge currency risks.

Out of a sample of 5,038 funds analysed by Esma, just 1,388 (27.6%) were found to have traded derivatives at least once between July 1 and December 31, 2016. The total number of trades was 472,757, for an average of 341 trades each.

Currency forwards accounted for more than half of these trades, at 53% of

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