As regular readers of our blog know, we spend most of our effort focusing on pension-related issues generally and the importance of knowing one’s liabilities more specifically.  However, we do depart from our mission periodically to bring to our readers interesting and hopefully timely topics. One such topic is currency management. As U.S. institutional clients have gotten more comfortable investing overseas in a variety of strategies, the management of currencies has taken on greater importance. The fact that the U.S. $ has continued to strengthen versus most foreign currencies creates a bit of urgency for the U.S. investor.

For years, I’ve been under the impression (incorrectly, I now realize) that currencies wash out over time and as a result, they shouldn’t be a primary concern. Well, like most relationships in our investment world, cycles can be rather lengthy providing the investor with ample opportunity to capture potential alpha from these currency cycles.  I’ve recently uncovered a terrific paper from 2016 by Mark Astley, CEO, Millennium Global Investments on the subject of currency management, and I thought that it should be shared. Please don’t reach out to me with any questions as you would be barking up the wrong tree, but I suspect that they would be more than happy to respond. I hope that you find this article as useful as I did.