Should investors in private equity funds hedge their foreign exchange exposures? And if so, how best to achieve this, in an illiquid asset class with long and uncertain durations? That is the topic of this month’s edition of FrontLine.
According to our analysis using data from eFront Pevara, private equity currency risk is significant enough to merit some level of active management. But it also shows that the most obvious solutions – such as blanket hedging strategies – might actually prove counter-productive.
Whether you choose to manage FX risk or not, eFront Pevara can provide the market insight to make an informed and measured decision.
While there are no perfect solutions, we offer some pragmatic tactical solutions to the conundrum. And if your organisation takes a different approach to those proposed, we would be delighted to hear from you.
I hope you enjoy the article and I wish you all a prosperous New Year.
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