FOR global investors, one of the most important investment decisions is always whether to hedge currency exposure. This seems particularly relevant today, given the sharp currency movements over the past two years.
For example, in 2013, the MSCI Japan index produced a sparkling 55 per cent total return measured in yen, but just 27 per cent when measured in US dollars.
Last year, a US investor betting on the MSCI Germany index saw a local currency gain of 3 per cent transformed by a falling euro into a 10 per cent loss in dollars. Clearly, in retrospect, hedging currency exposure would have been a good idea for many US investors over the past two years.
That being said, should investors be hedging...
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