Catholic Superannuation and Retirement Fund, Sydney, hired Pareto Investment Management to run a dynamic currency hedge on the funds A$800 million (US$687 million) international equities portfolio, according to Investment & Technology newspaper.
The A$3.4 billion super fund terminated the previous currency overlay manager, Macquarie Funds Management.
Pareto has had quite a flexible mandate to run the hedge, according to Greg Cantor, the funds CEO. The fund has a static hedge of 40% on its international equities, meaning just under half of the asset class is hedged on a daily basis. However, Pareto can take the static hedge down to zero or increase it to 100% depending on its market judgment.
It helps us get a bit more alpha, Mr. Cantor said.