Roy Walker IFA - Financial Adviser In Dubai

Introduction To some degree, currency risk is embedded in the portfolios of every international investor. So it’s surprising that such an important topic is often ignored, mismanaged, or misunderstood from both outside and inside the financial planning industry. Given that global currency movements are prominent in the headlines right now, it seems like good timing to have a quick review of currency risk, and safety-check that the currency exposure of our personal investment portfolio is in line with our objectives. What Is Currency Risk and Where Does It Come From? Most people who live and work internationally have experienced first-hand the impact of positive or negative currency movements; this is currency risk (also called exchange rate risk). Maybe you’re sending money home each month to pay your mortgage, and payments are easier than before because you get paid in a stronger currency. Or maybe your child wants to attend university in a country whose currency has appreciated again...

Simply put, leveraging means to borrow against owned assets to buy more . The effect is to give you more than 100% exposure to the asset performance. For example, you buy a house worth $500,000, of which $100,000 is your money and $400,000 you borrow from the bank. In time, the value of the property rises to $600,000 - i.e. a 20% increase. However your investment has doubled from $100,000 to $200,000 - a 100% increase. You have benefited from a 5:1 leverage . Investment fund managers can create leverage by using derivatives, such as options and futures, to gain extra exposure to certain assets beyond what they can afford outright. This derivative-created exposure allows the fund to benefit from asset returns without actually owning the underlying asset, and at much lower cost . When bond yields are low, leveraging allows bond funds to improve net returns . Leveraging is of course not without risks , and the permitted or expected level of leverage of a fund will be stated in the fund pr...

Click to download a copy of the original print article. The First Government Bonds Helped Create An Empire In the late 17th century, naval battles were rarely decisive, with victory depending more on weight of numbers than on strategy. In 1694 England (together with its main ally the Netherlands) was at war with France, and had already lost numerous ships in battle with the larger French navy. King William III of England had no option but to massively increase the size and power of the English navy, but there were no finances available. The Bank of England was therefore created as a private institution to supply money to the monarchy and government. The Bank raised 1.2 million pounds of debt in twelve days - the first bond issue ever of any national government. In 1688 the English fleet had started the war with 173 rated vessels, but ended it with 323. English sea power helped block Louis XIV’s ambitions and peace was negotiated in 1697. English naval dominance continued for two...