Longtime readers know I don't hedge currencies -- it's simply not economical for me to do so. Plus, studies show that over time currency fluctuations even out.
How much time? About a decade.
Yes, that might sound like a long time. But not when you consider that investing is something we're doing over the course of our adult lifetimes.
Yet different money managers have different views on currency hedges. Allan Robinson writes about this in The Globe and Mail. He cites Cundill as a firm that does hedge currencies, and Franklin Templeton as a firm that doesn't. Keep in mind the article is written from a Canadian point of view, which is important in that many forecast the Canadian Dollar will do well compared to the US Dollar over time.
Speaking of investing and the US Dollar, Marty Whitman of Third Avenue Value Fund reported in his latest shareholder letter that he's stopped hedging currencies in the portfolio. The fund is investing more overseas -- especially Asia -- and he believes the US Dollar will come under pressure in the months and years to come.
Third Avenue had been a consistent hedger of currencies. So this is, for me at least, an interesting bit of information. Partly because I own a fair number of foreign (non-US) stocks. Though, clearly, currency is not a major factor in buying (or not buying) a stock.
What's more, you doubtless have read me post that I don't short stocks. Just not my game. So perhaps it goes without saying that I don't short currencies. But I noted that The Chairman recommends maintaining US Dollar short position on his Maoxian blog.
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