A new study reveals foreign bond funds have outperformed other international funds by not using currency hedging strategies, The Wall Street Journal reports. Ever since the dollar began to weaken in 2002, a number of international funds have tried such a hedging strategy. The revelation comes as a blow to some investors who have pursued international bond funds offering the security of currency hedging provisions.
The newly released study by
Lippers report calls on mutual fund providers to become more forthcoming in discussing hedging strategies with investors. Lipper said funds should either communicate comprehensive hedging strategies or openly disavow the practice. Investments that hedge on a limited basis have in many cases done a poor job of informing shareholders.
