Currency overlay providers are missing out on an important tool that can help reduce the implementation headaches that plan sponsors frequently face when implementing a currency overlay program. Or so says Philip Simotas, President at FX Concepts, Inc., a firm founded in New York in 1981 by John R. Taylor Jr., ex-head of Citibank Corporate Foreign Exchange to provide pension plan sponsors with a disciplined, quantitative approach to currency management based on the use of computer-based models and cyclical analysis.
Clients of the firm include the pension plans of Eastman Kodak, the World Bank, Schlumberger and the San Diego Public Employees’ Retirement System. FX Concepts also manages currency as an absolute return strategy for some of the largest banks in the world, such as ABN Amro, JP Morgan/Chase, UBS Warburg, Societe Generale, Deutsche Bank and HSBC, which have outsourced currency risk to the firm. In the attached article, Bringing FX Prime Brokerage to Currency Overlay, Simotas argues that currency overlay strategists for long-only funds should make use of currency management techniques pioneered in the hedge fund industry.