Implementation of a currency hedging program is often regarded as a risk management exercise. The strategic asset allocation (SAA) hedging targets have been set; tactical dynamic asset allocation (DAA) tilts may be in place; and the investment parameters are pre-determined. All that is left is to ensure that currency exposures match the targets. Sounds straightforward.
As with many aspects of investing, the solution is more complicated, and investor outcomes are more nuanced. Read our latest investment insights paper from our liquid strategies team here.