Currency overlay solutions
Russell Investments is a leader in currency management. Our team of currency professionals are located in London and Seattle 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
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 programme works
As your currency overlay manager, we will:
- Work with you to decide on the features of the programme (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.
Any opinion expressed is that of Russell Investments, is not a statement of fact, is subject to change and does not constitute investment advice.
The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.
Any past performance figures are not necessarily a guide to future performance.