Currency Management for International Equity
The decision to manage currencies in international equity portfolio is a complex one. In the absence of a confident view on the direction of foreign currency, a risk averse investor might choose to just hedge the currency exposure of their portfolios. QMA demonstrates how an active investor may benefit from risk premia within the broader currency market and use currencies as a source of portable alpha to generate an additional source of risk-adjusted returns, above and beyond what a hedged equity portfolio could provide.