Sainsbury scheme eyes currency overlay

UK – The head of the 2.7 billion-pound (four billion-euro) pension fund of retailer J Sainsbury says the fund is considering a currency overlay strategy.

“We’re on the cusp of doing so,” said Geof Pearson, pension fund manager of the J Sainsbury PLC Pension Scheme. “We’re not doing it at the moment.” He added the fund is taking advice from consulting firm Frank Russell.

“If the consultant says you can get two to four percent per annum on assets invested that’s something worth looking at,” he told a conference in London.

He added: “We might as well have the added return for the fund if we can get it.” He said the fund has 55% of its assets overseas, compared to the UK average of around 30%.

“We’ve got consultants saying currency is the next big thing,” Pearson said. “For those with higher international positions that unrewarded risk needs dealing with.”

“What we are trying to do is take out the unrewarded risk and spend it elsewhere.”

Pearson did not name the managers the fund would appoint, but said: “We see it as a specialist area and would not appoint someone from our existing list.”

The fund would enter the area in a limited way to begin with. “You need to do it in a smallish way to build up confidence and understand the position.”

The event was organised by Global Pensions.

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