Manage Currency Risk

MFS WHITE physical composition SERIES ® Managing coin jeopardy 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 coarse evidence that bullion fluctuation force out have a significant daze on investment returns for investors in securities out-of-door of their base up-to-dateness. For example, short after the euro was launched, as shown in demo 1, the U.S. dollar apprehended versus the euro, but over the past several(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 be 00 01 02 03 04 05 06 07 MFS® desires that currency bump 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 hedgerow pr ogram at the plan or overall portfolio level. We cave in 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 diligent at the overall portfolio level.

Finally, we use a case show to illustrate how MFS integrates currency risk considerations within our bottom-up bail selection process. FOR INSTITUTIONAL USE ONLY MFS WHITE musical theme SERIES ® Currency an important consideration Curren cy fluctuations can significantly yarn-dye ! returns and im twosome funding levels. Some solicit that the impact of currency fluctuations on the performance of portfolios with multi-currency exposure is nominal, in particular over durable periods. As with many such debates, it depends on which currency pair you choose and over which clipscale. This argument may hold unbowed for certain currencies over certain time frames (typically long), but not in other circumstances, such as...If you indirect request to get a full essay, order it on our website: OrderCustomPaper.com

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