Currency management

Despite an increased commitment to overseas investment, as institutional and retail investors in the...

Despite an increased commitment to overseas investment, as institutional and retail investors in the UK have searched for increased diversification and returns, it has been very unusual for UK-based investors to hedge any of their currency exposure either actively or passively. We do not believe that this is the most efficient situation for the following reasons: l Passive hedging can reduce risk without impacting long-term returns l Active management of currency can reduce risk and add return. Historically, one of the arguments for UK investment funds remaining unhedged in their...