Foreign Exchange 'made simple' for Pension Funds | Pensions and Lifetime Savings Association

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Foreign Exchange 'made simple' for Pension Funds

17 May 2011

A new guide is being published today (Tuesday) by the National Association of Pension Funds (NAPF) to help pension funds better understand Foreign Exchange (FX) and how to cope with its risks.

Many pension funds hold investments outside the UK, particularly in Europe, the United States and the Far East. These can provide higher returns, but can also present currency risks that need to be handled carefully.

Foreign Exchange (FX) made simple is being launched today at the NAPF Local Authority Conference at The Belfry near Birmingham.

It provides information on the basics of the currency market, currency strategies and draws attention to the risks of foreign exchange and how they can be managed.

David McCourt, Senior Policy Adviser at the NAPF, said:

“International investments can help provide better returns and greater diversification. They can, however, entail significant risks for pension funds.

“Pension funds need to be aware that what may look a good return in a foreign currency might not be the case when converted back into sterling.

“Our guide offers clear and concise information on Foreign Exchange and how pension funds can better manage currency risks.”

The Foreign Exchange (FX) made simple guide is written and sponsored by Russell Investments.

Commenting on the guide, David Rae, Director of Overlay Services at Russell Investments, said:

“As pension funds have invested an increased proportion of their portfolios internationally, the impact of currency fluctuations and transactions costs on investors’ portfolios continues to grow.

“Through sponsoring this guide, we are very pleased to be able to support the NAPF and its members with understanding the intricacies of the foreign exchange market place.

“As a firm, we believe it is crucial for investors to accurately identify the costs incurred in executing foreign exchange transactions and take appropriate steps to reduce those costs to the benefit of the pension fund beneficiaries.”

The guide (hard copy) costs £18 for NAPF members and £35 for non-members. It can be ordered online at www.napf.co.uk

Notes to editors:

1.   David McCourt and David Rae are available for interview.

2.   Other recent made simple guides include Hedge Funds made simple, Stewardship made simple and Derivatives made simple.

3.   Russell Investments is an independent, global financial services firm that provides strategic advice, investment solutions, implementation services and global performance benchmarks that are customised to meet the unique needs of institutional investors, financial advisors and individuals. Russell has about $161 billion in assets under management (as of 21/3/11) and works with 2,300 institutional clients, 530 distribution partners and millions of individual investors globally.

4.   The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.

Contacts:

Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]

Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]