Trade of the month: Non-domestic underlyings

When investors are seeking diversification that includes foreign currencies, there is a choice of methods for approaching currency risk

While many structured products link to underlying assets in the same currency as that in which the product is issued, some use assets from another country and currency. For example, a product issued in the UK denominated in sterling may link to an overseas index such as the S&P 500. The choice of a foreign index or currency offers diversification or exposure to sectors such as emerging markets, and can provide a link to another asset class, such as commodities, which is denominated in US dollars