UK asset managers overpaying $5bn in currency deals

Hedging costs 'an indirect tax', report warns

The report highlighted myriad reasons for the excessive hedging costs incurred by some funds

The report highlighted myriad reasons for the excessive hedging costs incurred by some funds

UK asset managers could be overpaying by some $5bn a year in their currency deals, a hidden cost that is passed on to the end investor, new research suggests.

A study of share class hedge returns by Lumint Corporation and New Change FX (NCFX)  shows significant underperformance of hedged share classes. It found hedging could be costing the UK investment industry up to $5bn per year and describes the cost as "an indirect tax" on the end consumer and says it is undisclosed. CFA UK: Tiered fund fees best for retail investors The report said: "Forex share class hedging is routine and mechanical and thus frequently overlooked. But the numbers demand attention." When comparing hedged shares classes with their unhedged counterparts, the repo...

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