The business of serving high net worth investors has never been more global than it is today. If you haven’t begun to think globally your core capabilities already — and to start building the systems and infrastructure to support a world-wide business — now is the time to start. Why?
A multi-currency capability can help attract and retain high net worth clients accustomed to thinking and investing in global terms. Not all financial professionals can provide these investors with the support and guidance that they require, so adding a global focus can differentiate you from your competition and help you strengthen existing relationships and build new ones.
Global investment capabilities can help clients reduce their portfolio risk through diversification.
While non-U.S. markets have lagged domestic ones over the last few years, a recent study by Forbes’ magazine’s Gregg Fisher compared the returns of global and U.S. only portfolios over 121 rolling three-year periods between January 1, 1999 and December 31, 2011. In all but five of those periods, a global, diversified portfolio outperformed the domestic one — on average by 2.4%. [1]
Moreover, the global portfolio had less volatility and smoother, more predictable performance. Global investors also have access to a broader array of opportunities, like the Chinese e-commerce giant Alibaba, which debuted last year in one of the most hotly anticipated IPOs of the year.
According to USA Today, as of early May, 9 of the 12 best-performing stocks in the S&P Global 1200 index, were listed outside the U.S. including Asian stock market operator Hong Kong Exchanges & Clearing, Toyko-based drugmaker Eisai and Japanese-based video game maker Nintendo.[2]
Today’s most sophisticated high net worth investors demand access to the world’s best opportunities wherever they occur, and advisors can differentiate their practices by offering global investment capabilities. Yet global investment strategies bring challenges, as investment advisors need to fully understand their currency exposure and be able to move nimbly to adjust to changing conditions.
When your clients hold a position in an international stock, their portfolios accrue gains and losses both from changes in the value of the stock and in the currency in which it is denominated. Few systems can provide this level of reporting. Real-time trading connectivity and an understanding of tax implications are also important considerations when selecting a platform.
A global multi-currency platform that fits your needs
Innovest’s InnoTrust GLOBAL is one of the most sophisticated real-time, multi-currency trust accounting and custody system available. Offered in a flexible, secure Software as a Service (SaaS) model, this platform can be implemented quickly, easily and cost-effectively to enhance your global capabilities.
This system allows you to bifurcate gains and losses on underlying securities and currencies separately, in real time, giving instant insight into performance and risk.
Got a top-performing stock in a country whose currency is tanking? Our system will enable you identify those situations quickly — and take action to hedge currency risk if necessary. Through real-time access to your data, our platform gives you a continual stream of information about how currency movements are affecting your clients’ portfolios, so that you can protect them from risk and enhance returns.
When political or economic turmoil strikes — as in last year’s Ukrainian crisis or the ongoing drama about Greece’s potential for default — you’ll have the information you need to communicate with clients and devise strategies for reacting to market turbulence.
You can help your clients maintain the global diversification they need to achieve consistent, long-term performance, while reducing their vulnerability to sudden movements in markets and currencies. InnoTrust GLOBAL also offers cost accounting in local and base currencies, FX spot and forward processing, customizable reporting and integration with global custodians and sub-custodians.
The system is easy to use, with a single point of entry and inquiry for any currency. Your business is globalizing, and if you don’t offer your clients access to hedging and other currency strategies, you may find yourself at a competitive disadvantage. Yet global markets and currencies are volatile, introducing new kinds of risks. InnoTrust GLOBAL gives you the information and capabilities and data you need to manage risk and seize opportunities for your clients, wherever they occur around the world.
[1] “Why Global Diversification Still Makes Sense,” by Gregg S. Fisher, Forbes, January 17, 2012 http://www.forbes.com/sites/greggfisher/2012/01/17/why-global-diversification-still-makes-sense/
[2]“World's finest: The top stocks on the planet,” by By Matt Krantz, USA Today, May 6, 2015 http://americasmarkets.usatoday.com/2015/05/06/worlds-finest-the-top-stocks-on-the-planet/
