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Australian Retirement Trust bets on Japanese yen
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Australian Retirement Trust bets on Japanese yen

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  • Australian Retirement Trust has built its largest overweight position in the Japanese yen in years.
  • The superannuation fund shifted funds out of the US dollar as the yen traded near 159.21.
  • Management expects potential Bank of Japan interest rate hikes to strengthen the currency.

Australian Retirement Trust has taken its largest overweight position in the Japanese yen in years by reallocating capital away from the US dollar as the currency weakened towards 160 yen.

The pension fund built the trade over six months while the yen dropped to a 40-year low against the greenback.

"Any reversion in those two factors should support the yen," said Australian Retirement Trust Senior Portfolio Manager Jimmy Louca.

The trade accounts for roughly 0.5% of the fund's high-growth option, with management estimating the fair value for the US dollar-yen exchange rate at $1 to 150 yen or potentially the high 140s.

Market swap data currently indicates an 80% probability of a rate increase by Japanese central bankers in September.

The superannuation fund manages approximately $370 billion in retirement savings for its Australian members.

The business uses a dynamic asset allocation programme across its diversified investment portfolios to adjust currency risk.

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