There are a lot of moving parts here that can take time and contribute operational risk. This may seem opposite to our point of hedged share classes being simple and cost effective. But the asset managers who are finding success, whose hedged products are attracting real assets, they're partnering with providers who have three things.
First, custody expertise: Because custodians are sitting closest to where your fund lives, this gives close proximity to asset data and simplifies the process. Second, fund accounting capabilities: The fund accountant can see investor flows and NAVs in near real time, and so they can understand exactly what needs to be hedged at any given moment. And third, FX expertise: A global FX desk with experience and scale can execute trades efficiently and transparently.
When you have all three of these together - custody, fund accounting, and FX - that provider can automate the entire program. They calculate exposures based on current NAVs and investor flows. They execute the FX trades. They rebalance automatically. They maintain full audit trails. And they use independent best execution services so that you know you're getting fair pricing.
Here at RBC Investor Services, our extensive experience in all three aspects of the share class hedging lifecycle have given asset managers confidence to develop, launch, and market the hedged share class strategies. And with RBC, you are partnering with a truly Canadian provider that has the global reach and specialized depth that you need.
So what does this mean for your team? Your operational risk of managing a hedged share class drops and your people stay focused on what actually drives performance: Security selection, risk management, distribution, and your own clients.