Currency management

Manage complex currency exposure needs in uncertain markets.

The challenge

Currency volatility in an international portfolio can sometimes swamp the return expected from the underlying asset portfolio. Russell Investments has deep 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. Russell investments offers a broad suite of return-seeking currency solutions.

The Russell Investments' advantage

As a global leader in the provision of currency management strategies, Russell Investments has deep experience meeting the needs of sophisticated institutional clients globally. With over US$60.0 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.

¹ As of March 31, 2019. Assets in currency strategies globally.

Explore our suite of sophisticated currency management strategies

Passive currency strategy

Exposure to assets denominated in a non-base currency can introduce volatility. We have been successfully helping clients manage the risk associated with currency volatility since 1993 by offering a passive currency management strategy. Over time we have developed significant expertise and scale in our passive currency strategy including a suite of proprietary tools and unique capabilities designed to meet the bespoke needs of clients located in all major geographic regions around the world.

Aspects such as liquidity management, tenor management, counterparty credit exposure, proxy hedging, performance attribution and regulatory reporting are all carefully designed to meet the unique needs of each client.

Dynamic currency strategy

Our Dynamic Currency Strategy supports the dual investor goals of risk reduction and return enhancement.

Russell Investments’ Dynamic Currency Strategy supports dynamic changes in a client’s currency hedge ratio and looks for opportunities to raise expected returns and reduce cash flow drawdown by maintaining or increasing hedges on currencies experiencing declines while maintaining or reducing hedges on currencies experiencing gains, relative the unique base currency of the client.

Absolute return currency strategy

Currency exposure offers unique opportunities for return enhancement as well as providing diversification benefits that may reduce risk at the total portfolio level. Russell Investments’ Absolute Return Currency Strategy was built upon the same quantitative framework as our Dynamic Currency Strategy but differs in that it is not influenced by a client’s base currency - the resulting long/short currency positions are agnostic to the underlying currency exposures within the client’s portfolio.

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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. Our trading team executed FX trades globally in excess of US$1 trillion in 2018.

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.


Recognized leader in Implementation services

2019 Top-Tier Broker by Pension & Investments Magazine

Russell Investments Implementation Services, LLC has been ranked as a top-tier broker in Pensions & Investments’ March 2019 Tradewatch report based on the quality of its equity trade execution.²

Together or individually, these currency strategies are designed to lower transaction costs, minimize risk and reduce the operational burden of managing FX.

Significant global scale and resources, available as an extension of your team²

90+

Investment professionals
located globally

35 years

Experience in
implementation services

100+ markets

Ability to
trade

² Data on our global team represents our trading capabilities across all asset classes in strategies for clients around the globe.

Watch our brief video featuring our trading capabilities

 

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