Citing data from the WM Company, State Street Global Advisors says the average UK pension fund has increased its exposure to international equities from 21.8% at the end of 1996 to 31% in December 2006. The implication is that currency management has assumed even greater importance.
However, Collin Crownover, head of currency management at State Street Global Advisors, is not sure that all fund managers realize this. “In today’s low volatility macroeconomic environment, many investors have been lulled into a false sense of security in their international investments, unaware that volatility in currency markets has decreased considerably less than in equity and bond markets,” he says.
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