What works, what doesn’t, and why
FX hedging in equity portfolios is often framed as a question of right and wrong. In practice, it is a series of trade-offs.
This brief focuses on the decisions that actually drive FX hedge outcomes in equity portfolios. It explains why rolling FX forwards persist, where they work, and where they fail. It treats hedge ratios as governance choices rather than constants, and shows why carry, not volatility, dominates long-term outcomes.
It reframes equity FX hedging as a structural problem shaped by indefinite horizons, uncertain exits, and real-world constraints. There is no perfect hedge – only structures that balance cost, flexibility, risk, and governance tolerance.
For readers seeking implementation detail, this brief is supported by a longer practitioner paper covering instruments, carry dynamics, options convexity, and execution considerations.
Read the CIO brief
FX Hedging for Equity Portfolios – What Actually Matters