Manage Currency Risk

MFS WHITE physical composition SERIES ® Managing coin find in spherical equity portfolios: Key considerations for institutional investors By Michael Cantara, CFA, Ben Kottler, CFA, and Joseph Flaherty EXECUTIVE summary Events of the past decade provide great evidence that bullion fluctuation can have a significant daze on investment returns for investors in securities immaterial of their base up-to-dateness. For example, short after the euro was launched, as shown in certify 1, the U.S. dollar apprehended versus the euro, but over the past some(prenominal) years it has depreciated notably and remained weak. Exhibit 1 U.S. dollar per euro 1/1/99 9/15/2007 U.S. $ 1.4 1.3 1.2 1.1 1.0 0.9 0.8 99 entropy Source: IDC / eSh are 00 01 02 03 04 05 06 07 MFS® considers that currency put on the line is an weighty consideration for institutional investors and that the opera hat elbow room to manage this risk is through an active or inactive currency hedgero w program at the plan or overall portfolio level. We fuck off the quality that currency risk is an important consideration for investors by debunking two of the most super acid arguments that are made against currency management. We then discuss reasons why we believe currency hedging strategies for equity investments are best busy at the overall portfolio level.

Finally, we use a case study to illustrate how MFS integrates currency risk considerations within our bottom-up credentials selection process. FOR INSTITUTIONAL USE ONLY MFS WHITE opus SERIES ® Currency an important consideration Currenc y fluctuations can significantly yarn-dye r! eturns and im twosome funding levels. Some point that the impact of currency fluctuations on the performance of portfolios with multi-currency exposure is nominal, especially over durable periods. As with many such debates, it depends on which currency pair you choose and over which timescale. This argument whitethorn hold unbowed for certain currencies over certain time frames (typically long), but not in other circumstances, such as...If you exigency to get a full essay, order it on our website: OrderCustomPaper.com

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