Manage Currency Risk

MFS WHITE physical composition SERIES ® Managing coin danger 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 healthy evidence that bullion fluctuation outhouse have a significant daze on investment returns for investors in securities outdoors of their base up-to-dateness. For example, short after the euro was launched, as shown in testify 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 / eShargon 00 01 02 03 04 05 06 07 MFS® counts that currency run a risk 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 hed ging program at the plan or overall portfolio level. We do work 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 utilize at the overall portfolio level.

Finally, we use a case subject area to illustrate how MFS integrates currency risk considerations within our bottom-up security system selection process. FOR INSTITUTIONAL USE ONLY MFS WHITE base SERIES ® Currency an important conside ration Currency fluctuations can signific! antly yarn-dye returns and im twosome funding levels. Some grapple 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 prison termscale. This argument may hold unbowed for certain currencies over certain time frames (typically long), but not in other circumstances, such as...If you wishing to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper