Deutsche Bank says currencies can be the saviour for unfunded pension plans. In new research titled “Currencies: Pensions Saviour?”, the bank suggests foreign exchange is the answer to future pension fund problems caused by underfunded pension plans. According to Bilal Hafeez, global head of FX strategy and author of the report, foreign exchange “should be viewed as an asset class similar to bonds and equities” as its long-term systematic returns are “comparable, if not better” and it has greater liquidity than both.
Based on evaluations of the FX market over the last 20 years Deutsche suggests that for global portfolios to benefit the most from foreign exchange, allocations to FX should be comparable to those of bonds and equities, i.e. 20%-30%.
Deutsche suggests FX can save pensions