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Proven cost savings with Russell Agency FX
We strive to get the best deal on your FX trades
As of December 2010, our Agency Foreign Exchange (FX) Trading program has saved more than $68 million by effectively executing FX trades. Our agency approach gives us more choice when selecting trading counterparties. And because we are a third party acting on your behalf, we stay independent in our decision-making.
We pay attention to the details of each FX trade — when it was executed, the market rate at the time of trading and your true cost. In an ideal scenario, FX transactions should be executed at prices close to the best price of the day as opposed to the worst price of the day (which is often the case when FX trades don't receive the attention they deserve).
We recently analyzed 40,000 FX trades executed by investment managers and custodians and other FX counterparties between January 2008 and December 2009. We found:
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- the average FX transaction cost was approximately 9 basis points
- the average transaction cost for most developed market currencies is only 1-3 bps
- this increase in transaction costs could result in a 2% loss of a portfolio's total value over a 40-year period¹
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These findings were nearly identical to similar research we conducted in 2004 on approximately 36,000 trades.
FX trade execution needs to receive the right level of attention to avoid unnecessary costs, and Russell's Agency FX team is ready to do this for you. Call us today.
For more information about our capabilities with foreign exchange trading, please contact David or Gerry:
Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company.
¹ The figure is based on the different in end value over a 40-year period between an investor earning a 7.00% rate of return versus the same investor receiving a rate of return of 7.06%. The new Russell research finds that the average cost of each FX transaction is 9 basis points, which is 6 to 8 basis points higher than estimates.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
USI-6581-04-12
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