CUSTOMIZED PORTFOLIO SOLUTIONS

Currency management

Proactively managing currency risk

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

Improve portfolio risk-return profile

Lower transaction costs

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.

FX trading

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 2021 we traded across 212 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 U.S. $68 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.

90⁺

Investment professionals located globally

35 years

Experience in implementation services

100⁺ markets

Ability to trade

Quoted figures above are as of December 31, 2021.

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