In times of diverging monetary policies, currency hedging has never been more important

Critical source of return and risk reduction

Ignoring currency risks embedded in international equity portfolios can take away a critical source of return and risk reduction.

Making the right call on the rise of foreign underlying assets, but not seeing profits fully realised due to currency losses within a portfolio, can leave investors feeling like they have missed an opportunity. In 2015, many UK investors hoped to capture the potential tailwinds of a fresh round of quantitative easing (QE) on Japanese equities, but did not participate fully in the rally. Over the year ending October 2015, the MSCI Japan index was up 17.41%; but because of GBP strength versus the yen, a UK investor would have gained only 12.9% after converting those foreign denominated ...