Why most FX overlays behave badly over time
Most institutional FX hedging treats FX risk as a single problem, solved with a single tool: rolling short-dated FX forwards.
Operationally, this works.
Structurally, it often doesn’t.
Indefinite exposures and genuinely long-dated exposures behave very differently. Treating both with the same rolling hedge is not conservative – it is incoherent.
This CIO brief explains why FX overlays fail quietly over time, what rolling forwards actually do (and don’t), and when structure matters more than price. It shows how carry, path dependency, and governance choices drive outcomes far more than spot moves.
The objective is not to eliminate FX risk.
It is to align the hedge with the nature of the exposure.
Read the CIO Brief
FX Hedging Beyond the Roll