Australia Pension Fund Hedging to Double in Decade, RBA Says

Australia’s pension funds are set to double their foreign-exchange hedge books over the next decade as the A$4.3 trillion ($2.9 trillion) sector ramps up its exposure to overseas assets, said Reserve Bank Deputy Governor Andrew Hauser.

In remarks to the board of CLS Bank International in Sydney on Tuesday, Hauser pointed out that Australia’s pension fund industry — currently the fourth-largest in the world — is projected to grow to 180% of gross domestic product over the next decade from 150% now. That alone could see the sector’s total hedge book, currently estimated at around A$500 billion, double over 10 years, he said.