Currency hedging
Performance of currencies ( in £) over 10yrs
Dollar ( 34.4 %) Yen ( -11.3 %)
50 % |
|
|
|
|
|
|
|
|
|
40 % |
|
|
|
|
|
|
|
|
|
30 % |
|
|
|
|
|
|
|
|
|
20 % |
|
|
|
|
|
|
|
|
|
10 % |
|
|
|
|
|
|
|
|
|
0 % |
|
|
|
|
|
|
|
|
|
-10 % |
|
|
|
|
|
|
|
|
|
-20 % |
|
|
|
|
|
|
|
|
|
-30 % |
|
|
|
|
|
|
|
|
|
Jan13 |
Jan14 |
Jan15 |
Jan16 |
Jan17 |
Jan18 |
Jan19 |
Jan20 |
Jan21 |
Jan22 |
Source : FE Analytics
unnecessary if you are taking the long view and can tolerate some volatility ,” he explains . Christopher Rossbach , chief investment officer at J Stern & Co , points out the global companies he invests in will carry out their own hedging where appropriate : “ These companies do business all over the world , have sales , costs and financing that are aligned , and have currency hedges to offset short-term moves ,” he explains . “ They do their own hedging so we don ’ t have to .” He also warns of potential pitfalls . “ There is always the temptation to react to short-term exchange rates ,” he continues . “ Investors could have locked in the post-Brexit rebound only to lose out last year . Now they are facing the same question of locking in gains this year . Getting currency rates right is hard enough for hedge fund managers . We invest in companies , not markets , and do not believe in market timing .”
Issue 91 - January 2023 / 15 /