Pensions - Articles - Trump tariff turmoil makes schemes rethink FX strategies


Barry Jones, Chief Investment Officer at Isio, comments: “European pension funds holding US assets face an unprecedented challenge. The dollar has been excellent long-term for capital preservation and as a safe haven, due to the dollar moving inversely to risk assets in times of market weakness.

 Unhedged exposure to the US was something that overseas investors could rely on as a safety blanket but now, for the first time since the 1940s, that may no longer the case.

 “Trump’s tariff turmoil has tanked US markets and the dollar at the same time. European pension schemes without appropriate hedging strategies in place are in trouble. Earlier this year, in the immediate aftermath of Liberation Day, pension schemes were preoccupied with making sense of and navigating huge market moves. Now the initial storm has passed, they are quickly turning their attention to longer-term strategic currency positioning.

 “Pension schemes in vulnerable positions – with significant unhedged US exposure – could already have missed the boat. Their challenge may be one of damage limitation. For other schemes with more salvageable positions, the time to act is now to reassess exposure to the dollar. Dollar devaluation appears to be an end game goal for the Trump administration and we are seeing a range of different schemes reevaluate their currency hedging strategies as a result. “
  

Back to Index


Similar News to this Story

How might the retirement income market change in the future
The Pensions Policy Institute (PPI) published the first in a series of reports examining what an assessment of Value for Money (VfM) could look like i
Broken pension transfer system exposed
PensionBee report exposes broken pension transfer system and calls for 10-day pension switch guarantee. PensionBee calls for legislation to end transf
Low member engagement remains the biggest hurdle
XPS Group poll reveals low member engagement is the biggest hurdle to getting an effective default retirement solution amongst trustees and employers.

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.