Currency overlay

We are a global a leader in currency management with over $48 billion in AUM as of June 30, 2016. Our team of currency professionals are located in Seattle and London, which allow us to provide superior service to our global client base. We offer three primary currency solutions to assist investors meet their investment objectives:

  • Passive Currency Hedging
  • Dynamic Currency Hedging
  • Absolute Return

Passive currency hedging

Why is managing currency exposure important? International investors receive a return consisting of the gain or loss of the foreign security plus the return on the currency used to purchase the security. Currency volatility can be significant and the return from the currency can sometimes swamp the gain or loss on the foreign security. Many investors are uncomfortable with this volatility and look to Russell Investments to help them manage this uncompensated risk.

Currency hedging can reduce or eliminate the foreign exchange volatility from holding international assets. An investor would hedge by selling foreign currencies that are implicitly included in an international portfolio and buying the domestic currency.

How our currency hedging program works

As your currency overlay manager, we will:

  • Work with you to decide on the features of the program (for example, the frequency of rebalancing the hedge)
  • Gather portfolio information from your custodian
  • Calculate the amount to hedge for each currency
  • Manage trading and settlement
  • Report monthly on the effectiveness of the hedge

Dynamic currency hedging

In our view, Russell Investments' Informed Dynamic Currency Hedging goes a long way to solving the conundrum of what, when and how much to hedge.

A smarter way to manage uncompensated currency risk

As volatility rises in currency markets, investors are re-thinking their currency hedging policies and are looking to improve the risk-return profile of their international currency exposure. Russell Investments' Informed Dynamic Currency Hedging model (IDCH) which looks for opportunities to raise expected returns and reduce cash flow drawdown from currency hedging within an investor's international portfolio. The approach leverages Russell Investments' long-standing research and experience in currency factors to provide a more attractive currency hedging policy

Contact us for more information

Russell Investments Implementation Services, LLC., member of FINRA, SIPC.

Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.