Manage Currency Risk

MFS WHITE physical composition SERIES ® Managing coin luck 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 rich evidence that bullion fluctuation evict 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 award 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 information Source: IDC / eSh be 00 01 02 03 04 05 06 07 MFS® believes that currency guess 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 hedging program at the plan or overall portfolio level. We urinate 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 assiduous at the overall portfolio level.

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

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