Russell Investment Group (Russell) has announced the launch its first Dublin-domiciled Active Currency Fund.
The multi-manager fund allows investors to access active currency managers to provide a diversified source of return with no correlation to traditional asset classes. It will be daily traded, is UCITS 3 compliant, and will have share classes suitable for US dollar, euro, sterling, and yen based investors. The fund will aim to provide a return in excess of LIBOR with alpha generated from actively managed currency positions, primarily through the use of currency forwards.
Russell has researched active currency managers for 15 years and today actively monitors around 40 active currency products. To optimise returns and control risk, the new fund combines three managers with complementary investment styles: a fundamental manager (BGI), a technical manager (Pareto Partners) and a hybrid fundamental/ technical manager (FX Concepts).
BGI's developed and emerging markets processes incorporate a range of fundamental factors including valuation, portfolio flow, interest rates and momentum. Pareto Partner's process aims to capture trends in the major currency pairs, while FX Concepts operate in the developed markets with a hybrid process based on interest rate fluctuations and technical factors.
'Currency management is an area which has historically received little attention from investors from a return-seeking rather than a currency hedging perspective,' says Alison Ramsdale, Managing Director, Product Development, EMEA. 'However, research suggests that this lack of attention represents a missed opportunity.
'Active Currency management is a 'stand alone' or 'pure alpha' strategy, independent of any existing currency exposures,' she continues. 'Though the currency market is the largest and most liquid market in the world, with average daily transactions of almost USD 2 trillion, there are inefficiencies, which good active currency managements can exploit. This is because a significant proportion of current market participants (central banks, corporate treasuries and tourists) have objectives, which are not profit motivated. Indeed, many international equity managers do not actively manage their portfolios' currency exposures, treating currency exposures as a by-product of stock selection decisions. Our fund offers investors access to a new and exciting asset class, further diversifying their asset base and providing a greater diversity of returns.'
Background notes: Russell Investment Group, a global leader in multi-manager investment services, provides investment products and services in more than 39 countries. Russell manages nearly USD 155 billion in assets, of which USD 52 billion is managed from Europe, and advises clients worldwide representing more than USD 2.4 trillion. Founded in 1936, Russell is a subsidiary of Northwestern Mutual and is headquartered in Tacoma, Wash., with additional offices in New York, Toronto, London, Paris, Singapore, Sydney, Auckland and Tokyo.