What is currency management?
When institutional investors make allocations to international assets, they are exposed to exchange rate fluctuations. That currency exposure can have a large impact on realized returns. Currency management uses currency hedging and absolute return strategies to minimize the risks of currency exposure and seeks to use currency factors as a source of diversified return.
We offer a comprehensive currency management strategy and resources with experience and expertise to help your organization:
Reduce the operational burden of managing FX
Our suite of customized currency management solutions
As a leading global currency manager, Russell Investments has deep experience meeting the needs of sophisticated institutional clients globally. Our highly-knowledgeable currency specialists work alongside you to tailor a strategy that helps minimize the currency risk embedded in your international portfolio. Supported by a disciplined and proven implementation framework, we execute using our dedicated foreign exchange (FX) trading as both an agent and fiduciary. We can help manage operational, counterparty, and settlement risk and deliver ongoing support and comprehensive performance reporting.
Currency hedging for risk management
Currency hedging using forward exchange contracts is an effective way of reducing the unrewarded risk from currency exposure. A currency hedge creates positions that move in the opposite direction to the currency exposures in the underlying portfolio to help minimize risk. In a passive currency hedging program, we hedge a static percentage of the foreign currency exposure.
Dynamic currency hedging
Dynamic currency hedging allows the currency hedging ratio to be flexible over time to generate greater excess returns than a passive hedge. The currency hedge ratio can be adjusted to currency valuations, interest rates, and other factors that drive currency returns. Investors can improve the risk-return outcomes of their portfolio relative to static hedging policies or no currency hedging at all.
Absolute return currency strategy
The absolute return currency strategy uses a systematic approach to extract benefits from factors responsible for currency returns. This strategy creates an intentional exposure to proven factor exposures. Currency returns demonstrate a low correlation to mainstream assets providing additional diversification benefits.
Your currency strategy is supported by our FX trading platform executing on an agency-only basis, accessing multiple sources of liquidity with an experienced team overseeing the trading process. Our specialist FX traders actively manage the quality of execution from the portfolio level in real-time, adjusting the trading strategy on an order-by-order basis in response to changing market conditions or security-specific developments. We execute trades with multiple venues, actively transacting through numerous global execution outlets with unbiased access to a broad array of liquidity sources. Our centralized FX trading platform accesses multiple banks, dealers, and streaming liquidity sources, minimizing costs via netting, crossing, and high-quality execution.
Why choose Russell Investments as your currency manager?
Holistic FX platform
Our pure agency trading platform enables meaningful netting and matching opportunities for efficient, cost-effective, and confidential trading. In 2022, we traded across 142 currency pairs.
Dedicated currency expertise
Our currency team specializes in the design and execution of currency strategies tailored to the individual requirements of each client. The team manages over US$50 billion assets in currency strategies.
Disciplined end-to-end process
Supported by proven processes and robust infrastructure, our team builds guidelines according to your unique requirements maintaining ongoing monitoring and detailed transparent reporting to underlying performance. Reduce your operational burden and gain peace of mind.
Investment professionals located globally
Experience in implementation services
Ability to trade
Quoted figures above are as of December 31, 2022.
Customized Portfolio Solutions
Specialist expertise and strategies to help your team gain greater portfolio control, limit costs, reduce risk, and enhance returns.
Managing assets in transition to minimize unnecessary costs and mitigate unrewarded risk.
An essential tool for managing large pools of capital as derivative overlays help manage risk elements and improve performance.
Execution solutions to achieve enhanced returns using the latest advances in technology to find liquidity, reduce transaction costs and manage risk.
Improve control of exposures and risk-adjusted returns and reduce the cost of production while keeping your investments precisely aligned to your beliefs without sacrificing the power of a multi-manager approach.
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Russell Investments has been globally recognized for excellence in the investment industry.
We have a proven track record in investment implementation, with scale, client satisfaction, innovative solutions and more than 35 years of experience.
Russell Investments was ranked globally as one of the top 10 managers of factor-based strategies. This ranking is based on worldwide assets under management (AUM) from 58 firms (as of December 31, 2022), where Russell Investments ranked 9th in the 2023 Pensions & Investments' "Special Report: Money Managers."1
For 19 consecutive years, Russell Investments has been ranked as one of the top 10 largest institutional managers of overlay assets. This position is based on U.S. institutional, tax-exempt overlay assets from 27 firms where Russell Investments ranked 3rd (as of December 31, 2022) in the 2023 Pensions & Investments "Special Report: Money Managers."2
In 37 out of 42 most recent quarters, Russell Investments Implementation Services, LLC has been ranked as a top-tier broker in Pensions & Investments' Tradewatch report based on the quality of its trade execution (most recently in P&I's March 2022 issue).3
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