Monday, January 3, 2011

Net Currency Exposure

The net currency exposure of a fund is the net percentage (i.e. long or short) breakdown of each currency in the portfolio. The fund manager may report these percentages in their regular reports, along with commentary e.g. 'we are x% long the Yen because of our fundamental view', etc. It is worth knowing what currency hedging policies a fund product has in place, because in some circumstances an investor may want to retain currency exposure, while in others they may wish to be hedged (e.g. diversification reasons, hedging premium reasons, macro outlook reasons, etc).

Synonyms: Currency exposure, Net currency position, Foreign exchange exposure, FX exposure

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