Cross-border investments concentrate risk in a single currency, most often the US dollar. Foreign currency risk can be substantially reduced, while still maintaining the value and convenience of a single obligation currency, by indexing servicing obligations and repayment amounts to movements of a basket of currencies. The World Parity Unit (WPU) was specifically designed to fulfill this role, and provides currency risk reduction at minimal cost.

WPU Exchange Rates:

10 Year Bond Interest Rates

The World Parity Unit (WPU) is a basket of eleven currencies: the seven largest developed market currencies and four emerging market currencies. The allocation to four emerging currencies helps preserve global purchasing power.

Fiat currencies bring two risks for investors: First, there is the short-run risk of currency devaluation. Second, there is the long-run risk of internal devaluation, i.e., inflation. WPU was designed to minimize currency risk and to preserve global investors’ wealth in the long-run, and in global terms.

Diversified exposure to seven developed currencies minimizes the short-run risk of currency devaluation. An allocation in four emerging currencies helps preserve global purchasing power.