A deep dive into FX hedging [Members]
For MOGULS by The Investor
on July 30, 2026
All investors with holdings in foreign assets are doing macro investing – but very few have decided which macro trade they are actually running. So argues long-time Monevator reader and commenter Ho Simpson in this special guest Moguls post on FX hedging for retail investors.
There’s a popular myth in personal finance: remove FX volatility from your portfolio – that is, the ups and downs of currency swings – and you’ll sleep better at night.
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I’ve got nothing to say other than I really enjoyed this and am looking forward to part 2!
This is a great article – from someone who really knows the space. Of course I’m biased because they agree with my (substantially less technical) https://peak-framework.live/dont-currency-hedge-your-equity-portfolio/%3C/a%3E%3C/p%3E
I’m slightly biased to be more sympathetic to hedging if it provides positive carry (even though this is a “layered” bet – I am indeed making a side bet on carry!).
Pretty much the only thing I actually might hedge are short-term bonds held in the accounts that I manage for older members of the family – because they have much higher volatility aversion in GBP than the rest of us.
Thanks. I really enjoyed it and look forward to part 2 too.
Thanks for this article @TI. it has expanded my knowledge of the hedge greatly.
I have but one fund that has (overt) hedging which I bought many years ago and took advice from a seasoned investor friend to buy the hedged version – IJPH.L
It is a full half a percent fatter on the fees than the nearest similar exposure to the same area, and now a very small part of my portfolio (1/2% ish) but looking at the timescale I have held (13Y+), it seems to have paid off. Moving forward, who knows. As with all things, a little luck might have had something to do with it.
I look forward to part 2.
JimJim
This area feels very much above my pay grade but I really enjoyed it. Especially the deep dive on gold and hedging. Thus found this paper from Vanguard on global bonds and currency management helpful when I was working out my approach.
https://www.vanguard.co.uk/content/dam/intl/europe/documents/en/going-global-with-bonds-unlocking-diversification-through-global-fixed-income-eu-en-pro.pdf
Looking forward to pt2 too