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Saturday 15 December 2018


Spring Conference

ERAFP tenders three management mandates for hedging foreign exchange risk of assets

Written by Natalie Tuck

The French public sector additional pension scheme, ERAFP, has launched a call for tenders to award one action and two standby management mandates for hedging the foreign exchange risk of its assets.

Announcing the call for tenders, it said the macroeconomic situation in recent years has brought to light the importance of currency risk incurred by investors in their portfolios. In this context, management of foreign exchange hedging for the assets in ERAFP's consolidated portfolio has three main objectives: first, reduce the overall exposure to foreign exchange risk by decreasing the exposure to foreign currencies; secondly, better coordinate foreign exchange hedging and, lastly, reduce the cost of this hedging.

Through this call for tenders, ERAFP’s aim is to select three investment companies in the currencies asset class, one active manager and two standby managers. The active contract holder will be tasked with creating and managing a mutual fund for managing the foreign exchange risk of ERAFP's assets through a global strategy that consists of a passive hedging strategy and, where applicable, a dynamic hedging strategy.

The notional amount hedged at the start of the mutual fund is expected to be around €2bn. The initial term of the mandates will be four years, with ERAFP having the option to renew the contract for two successive two-year periods.

The tender documents are available at

The submission deadline is 19 January 2018 at noon (Paris time).

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