FX hedging activity among North American funds at four-year high, survey shows

LONDON, Aug 18 (Reuters) - Currency hedging by fund managers in the United States and Canada has risen to 94% - its highest level in at least four years - against a backdrop of heightened geopolitical uncertainty, a survey by FX and cash management solutions firm MillTech shows.

Here are the main findings of MillTech's North America Fund Manager FX Report released on Tuesday.

• 94% of respondents said they are now hedging their currency risk, up from 85% in 2025-marking the highest level in the four-year series.
• Small funds are more likely to hedge than larger ones, at 98% and 88% respectively. This may reflect that, given a smaller asset base, any losses arising from unhedged currency exposure could have a proportionally greater impact on smaller funds, especially in a volatile market.
• As well as increasing currency hedging, funds across North America are changing how they hedge with extending hedge length the most common planned response to politically driven dollar volatility, according to 63% of respondents.
• Just over a third of those survey said they planned to increase hedge ratios, while a almost a quarter said they planned to reduce hedge ratios.
• The first quarter of the year saw pockets of losses on unhedged currency exposure linked to geopolitical tensions. The average loss was $730,665, with most ranging between $100,000 and $499,999, although just over 12% reported losses between $1 million and $4.9 million.
• "This combination is an important reminder that favorable currency moves at fund level can sit alongside costly gaps in individual exposures," the survey said.
• MillTech surveyed 250 mid-sized asset management firms across the United States and Canada in June.