Global Investing : The Importance of Currency Returns and Currency Hedging

There is a continuing trend for investors to reduce their home bias in equity allocation and increase the allocation to international equities. An important consideration in move towards global investing is the impact of currencies. An adverse movement in the exchange rate can dramatically change the performance of an international investment. In this research bulletin we review the performance of currencies, both in nominal and real terms, compare domestic and international equity returns and finally look at the impact of currency hedging