Apr. 14, 2015, 3:18 PM
- While many investors cite volatility reduction as a rationale for currency hedging, a white paper from GMO's Catherine LeGraw argues: 1) Volatility may be cut over the short-term, but not over longer horizons; 2) Volatility benefits have been reduced over time as companies become more global; 3) Even if volatility is lowered for international holdings, it isn't reduced for the whole portfolio as the hedging simply makes holdings more correlated with U.S. stocks; 4) Hedging introduces leverage and hence tail risk (see the move in the Swiss franc).
- WisdomTree (WETF -2.6%) has ridden a couple of star currency-hedged funds - DXJ and HEDJ to big profits.
- There's also Deutsche's DBEF, and not surprisingly a bunch more have recently come to market like [[DBRE}} and DBIF. BlackRock this week filed for 11 new currency-hedged ETFs.
- LeGraw: "Currency management is a useful tool when done for the right reasons: because of a high-conviction view, or a desire to mitigate an identified risk exposure. We caution that a simple currency hedging strategy may not achieve these objectives.”
Aug. 8, 2011, 8:22 AM
Royal Dutch Shell (RDS.A) receives an upgrade from Oppenheimer to Outperform from Market Perform with a price target of $80. The firm sees the Big Oil player realizing a nice earnings and cash flow boost following its $60B investment in projects over the last 5 years. Shares -2.6% premarket, in-line with other oil majors.| Aug. 8, 2011, 8:22 AM
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