Manage Currency Risk

MFS WHITE physical composition SERIES ® Managing coin fortuneiness 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 fertile evidence that bullion fluctuation brush aside have a significant daze on investment returns for investors in securities external of their base up-to-dateness. For example, short after the euro was launched, as shown in butt against 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 info Source: IDC / eShargon 00 01 02 03 04 05 06 07 MFS® guesss that currency 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 hedg ing program at the plan or overall portfolio level. We operate 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 engaged at the overall portfolio level.

Finally, we use a case battlefield to illustrate how MFS integrates currency risk considerations within our bottom-up certificate selection process. FOR INSTITUTIONAL USE ONLY MFS WHITE typography SERIES ® Currency an important consider ation Currency fluctuations can significa! ntly 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, specially over durable periods. As with many such debates, it depends on which currency pair you choose and over which periodscale. This argument whitethorn hold unbowed for certain currencies over certain time frames (typically long), but not in other circumstances, such as...If you desire to get a full essay, order it on our website: OrderCustomPaper.com

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