Currency management
Manage complex currency risks.
The challenge
Currency volatility in an international portfolio can sometimes swamp the return expected from the underlying asset portfolio. We have experience designing and implementing cost-effective currency management strategies with a goal to reduce uncompensated risk. Currencies may also present opportunities to enhance the return of a client's total portfolio.
The Russell Investments advantage
As a global leader in the provision of currency management strategies, we have experience meeting the needs of sophisticated institutional clients globally. With nearly £50 billion in assets in currency strategies¹, we offer a full suite of currency management solutions including passive, dynamic and absolute return currency strategies.
In addition, we offer a unique pure-agency currency execution service designed to reduce currency execution costs, improve transparency and reduce operational burden for clients.
Russell Investments was named winner of “Currency Manager the Year” at the 2022 Pensions and Investment Providers Awards.
Offering a broad suite of currency solutions
Passive currency hedging
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.
Dynamic currency strategy
While our passive currency strategy is exclusively focused on reducing the risk associated with exposure to non-base currency, our dynamic currency strategy supports the dual investor goals of risk reduction and return enhancement. Our dynamic currency strategy goes a long way to solving the conundrum of what, when and how much currency exposure to hedge.
Absolute return currency strategy
Academic research suggests that currency factors strategies can offer meaningful and relatively uncorrelated return sources.
A trading approach which supports best execution and fiduciary alignment
Agency FX trading
Unlike a principal trading provider, Russell Investments does not have a proprietary trading book. Our currency management strategies are supported by an Agency Foreign Exchange (FX) trading approach, where liquidity providers compete for our order flow and we pass execution benefits directly to you, including savings related to reduced bid/ask spreads, market impact and custodian charges.
Acting on your behalf, we:
- Reduce costs by netting your transactions and trading as an agent
- Improve transparency by time stamping every transaction and showing the cost of execution
- Align our interests with yours by acting as a fiduciary
- Manage counterparty risk by trading with over 20 banks
In addition, you can take advantage of our foreign currency trading services whether you handle currency needs internally or delegate them to your investment managers. Employing an agent who is also a fiduciary has become more important as courts and regulators have become less patient with those who don’t manage all their costs - including costs to trade foreign exchange - effectively. Investors can help manage these legal and regulatory risks by delegating responsibility to a currency trading agent who is also a fiduciary.
Russell Investments was also an early signatory of the FX Global Code which is a set of global principles of good practice designed to promote integrity and the effective functioning of the wholesale foreign exchange market.
Together or individually, these currency strategies are designed to lower transaction costs, improve portfolio risk-return profile and reduce the operational burden of managing FX.
90+
Investment professionals
located globally
35 years
Experience in
implementation services
100+ markets
Ability to
trade
Article
Currency Matters
As the allocation to non-domestic assets increases, currency hedging is becoming increasingly important. Find out more about the mechanics of a currency hedging programme and how short-term differences can occur in the benchmark-relative returns of hedged and unhedged share classes of the same fund.
Industry leading
When you invest, it's good to know you're among the best. Russell Investments has been globally recognised for excellence in the investment industry.
We have a proven track record in investment implementation, with scale, client satisfaction, and innovative solutions, and more than 35 years of experience.
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).
Russell Investments was named the winner of the “Transition Management Firm of the Year” at the 2018 European Pensions Awards. Chosen among five finalists in this category, Pensions Age and European Pensions cited Russell Investments’ understanding of clients’ needs and the firm’s demonstrated performance and innovation.
Explore more with these resources:
Articles:
Global investing and currency hedging: Performance and impact
Managing Currency Exposure
Case studies:
Agency FX trading programme
A dedicated implementation partner
Currency management service summary
Absolute Return Currency Strategy service summary
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Learn more about our customised portfolio solutions
Transition management
We help clients to manage their risks and investment performance when restructuring their portfolios or asset classes.
Trading and execution
Delivering client-centric, flexible solutions while employing the latest advances in technology to find liquidity pools that reduce transaction costs and manage risk.
Overlay services
This is an essential tool for managing large pools of capital as derivative overlays help manage risk elements and improve performance.
Any opinion expressed, is not a statement of fact, is subject to change and does not constitute investment advice.
The scenarios presented are an estimate of future performance based on evidence from the past on how the value of this investment varies and/or current market conditions and are not an exact indicator. Results will vary depending on how the market performs.
Past performance does not predict future returns, any forecast, projection or target is indicative only and not guaranteed in any way.
1 Source: Russell Investments. Data as at 31 December 2020.