LONDON — Currency overlay manager hirings by small and midsize U.K. pension plans have surged during the past six months. And currency specialists say assets managed overall for U.K. clients nearly doubled in the last year.
Demand has been so strong that money managers — including Barclays Global Investors, London, and Record Currency Management Ltd., Windsor — recently set up pooled investment funds to handle what has traditionally been an area of segregated mandates.
Goldman Sachs Asset Management, London, is rumored to be following suit, but firm officials would not comment.
Pooled funds for actively managed currency-based strategies are relatively new and make it easier for smaller pension plans to access this market, said John Gillies, director of consulting at Russell Investment Group, London.
Data to be published next month by Mercer Investment Consulting show that 15 of the 16 searches for currency overlay mandates done by the firm worldwide in the last six months were for U.K. clients. Assets placed in these searches totaled $4.4 billion, of which $4 billion was for U.K. clients. Mercer officials wouldn't identify any of the clients.
This compares with four out of eight similar searches the firm did for U.K. clients during the whole of last year for total underlying assets of $2.7 billion.
While similar statistics could not be obtained from other firms, consultants did acknowledge the use of currency hedging and absolute return strategies on currency by U.K. plans has increased in the last year.
"This is the year when (currency overlay) got to the top of everyone's agenda and word was converted to action," said Bill Muysken, global head of manager research at Mercer.
Currency specialists have seen assets soar in the last year.
At the end of June, BGI's U.K. assets under management in both passive and active currency strategies more than doubled to $25 billion from $13 billion a year earlier. The U.K. passive currency hedging business grew to $16 billion from $7 billion and the active currency strategies saw assets under management rise to $9 billion from $6 billion all over the same period.