Arguments for optimism: Why investors are looking on the bright side
Australia’s third largest superannuation fund, Aware Super, is also rethinking its position on currency hedging, particularly as the fund invests more offshore, said Damien Webb, deputy chief investment officer.
“When markets fall, the Aussie dollar tends to fall so being unhedged is usually a low-cost buffer because you get returns in an unhedged way, but that hasn’t always been the case recently,” he said.
Elsewhere, Railpen has also recently increased its currency hedging, and now has about a third non-sterling FX risk for the schemes that are open to new members. “By being really clear and aligned on our horizon, we actually got comfortable with the idea of increasing our currency hedging a little,” said Greaves.
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