Register  
Super fund fortunes shift on FX exposure
Wednesday, 14 August 2013 12:15pm

Unhedged foreign currency exposure may be the way to go for super funds after a fall in the Australian dollar contributed 8.8% to unhedged portfolios in the last financial year.

This bucks the trend of recent years. According to the NAB Superannuation FX Survey, released yesterday, fully hedged exposure to foreign equities has brought considerably higher returns over the last 10 years, adding 25%.

Unhedged exposure, on the other hand, would have lost you 37% due to the steadily rising Australian dollar.

However, NAB currency overlay director Danica Hampton said: "With the steep fall in the Australian dollar, after years of sustained currency strength, most super funds are sharpening their focus on foreign exchange issues.

"This attention has paid off for a number of funds, with the recent weakness of the Australian dollar and lower hedge ratios contributing to their strong investment performance in the last year."

NAB's survey, carried out every two years, also found a modest rise in superannuation fund exposure to foreign currency, from 17% in 2011 to 18.2% in 2013. A significantly higher proportion of super funds rank currency as an important factor - 83% compared with 73% in 2011.

The number of funds using currency specialists has also risen since 2011 from 84% to 88%.

But uncertainty abounds. "An overwhelming majority of respondents - 80% in fact - think that nobody is able to predict where the currency will be in 12 months' time," Hampton said.

"Nonetheless, there is some agreement about the broad currency trends; 67% of respondents expect the AUD/USD to fall from current levels, although 77% believe it's not in a new, higher trading range."

The timing of NAB's survey was in some ways unfortunate, as it concluded just days before the dollar began to plummet, when it was still trading between $1.02 and $1.06 against the US dollar.

NAB interviewed 64 industry and corporate superannuation funds for the survey, representing $650 billion of funds under management.

Blogs
Follow the industry experts.
Christopher Page
Christopher Page
Managing Director

The age of SMSFs
The growth of the number and volume of self-managed super funds (SMSFs) seems to have no end. As the sector reaches the one million ...read more
 
Benjamin Ong
Benjamin Ong
Chief Economist

Reflation, rotation and the taper
'Tis being my final type (drivel, to some gentle readers) for the year, we'll take a look back at the 2013 that was to seek the lessons ... read more
 
Alex Dunnin
Alex Dunnin
Director of Research & Editorial Services

BRUMBIE: Walk quietly but carry a big stick
It's now a few weeks since Financial System Inquiry (FSI) chief David Murray handed down his interim report and already sectional advance ... read more
News Search   
VideoBrought to you by
Who wants to be a RockStar 2014 Highlights
Count's Chris Mekhail was crowned 2014 Rockstar this year for his soaring rendition of Swedish House Mafia hit 'Don't You Worry Child' at the annual Who wants to be a RockStar event organised by the Finance ... Watch video
Platinum Asset Management
Reflecting on more than three decades in the industry, Platinum Asset Management managing director Kerr Neilson says one of the changes in the industry has the been the erosion of the information advantage ... Watch video
AMP Capital Australian Equity Concentrated Fund
We invite you to watch our latest video program on FSiTV featuring AMP Capital's Co-Head of Australian Fundamental Equities Gian Pandit, as interviewed by Mark Smith, deputy editor of Financial Standard. In ... Watch video
MAX 2014 Highlights
The annual MAX forum places all the movers and shakers in financial services when it comes to sales, marketing and distribution. Find out the recipe of those who are taking the lead. Watch the video n ... Watch video
Get it
Daily
FREE to your inbox, get the Financial Standard Daily Email.
Get the Free
iPad app
Download the Financial Standard iPad app for FREE
Industry
Events
SEP
03
SEP
10
Risk and Liquidity Forum
11
Liability Driven Investing Forum
OCT
07
Major Market Players Symposium
15
Investment Performance Measurement, Attribution & Risk Management
20
Family Office Forum
News
Bites
Advertisement

$245 (inc GST) for 1 year
 
 
Copyright © 1992-2014 Rainmaker Group
All material on this site is subject to copyright. All rights reserved. No part of this material may be reproduced, translated, transmitted, framed or stored in a retrieval system for public or private use without the written permission of the publisher.
Link to something K6XKp6Iz