This figure jumped to 53 per cent in the 2009 survey. Peter Bray, the head of foreign exchange institutional sales in Australia for NAB, said the need for super funds to be competitive against their peers prevents most from going 100 per cent hedged, except in international bonds. “They don’t really want the currency exposure but they’re still drawn to their peers,” he said. “The half-way point between active and passive is becom­ing popular, which is dynamic hedging. It fits in with markets being in a cycle because as the currency rises you reduce the hedge and as it falls you increase the hedge.

It’s pseudo active.” Lambert said the currency markets have a lot of daily noise, which makes it difficult for participants to look at long-term trends such as purchasing power parity. Nevertheless, the nexus between currencies and underlying econom­ics, particularly how the fundamentals impact on interest rates, are unavoid­able, even by the most active of traders among the specialist currency managers and hedge funds. “Currency strategists take the long-term economic forecasts and embed them in their models,” Lambert said. “For example, commodity prices and interest rate differentials reflect both long-term trends and shorter-term factors.”

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In many countries, particularly developing economies, fund flows chas­ing currency moves, or foreshadowing them, can have a significant effect on share markets. However, Lambert said, the more complex the market, such as the G-7 economies, the less is the cor­relation between fund flows and market moves. At the NAB conference, Donald Hellyer, NAB’s managing director, insurance and fund manager relations, will present the detailed findings of the latest client survey. He will also chair a debate on active versus passive currency management.

A panel of consultants, chaired by Steve Merlicek, Telstra Super’s head of investments, will look at the question ‘to hedge or not to hedge’. The consultants are: Graeme Miller, head of invest­ment consulting for Watson Wyatt, Ed Smith, head of currency for Frontier, and Steven Carew of JANA. Another panel will look at the challenge with global portfolios in transition management.

The panellists are: Jonathan Green of NSW T-Corp, Dharmendra Dayabhai of UniSuper, Lounarda David of Mercer Sentinel, and Michael Johnson of NAB Asset Servicing. Lewis Bearman, head of operations for Perennial Investment Partners, will look at managing money internation­ally from Australia, and Michael Block, the general manager, investments, for FuturePlus, will look at risk, counter­parties and liquidity. Challenges presented by doing offshore valuations, both in private and public markets, will be addressed by Tim Ridley of Access Capital and Ray Lester of NAB Asset Servicing, while Marco Feltrin of PricewaterhouseC­oopers will look at the tax treatment of foreign investments.