Hedging specialists vie for swelling FX overlay business

Custodians, banks and others look to capitalise on trend for buy side to outsource currency hedging

For the growing army of passive asset managers, foreign exchange risk is often seen as an annoyance – something that, while inherent in every foreign investment they make, is difficult and expensive to manage.

For years, some have chosen to outsource the mechanical hedging of this risk to currency overlay managers. But as assets under management have swelled in recent years, and with the Covid-19 pandemic shining a spotlight on costs and operational risks, FX overlay managers are seeing a rise