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MSCI HEDGED INDEXES HERO IMAGE

MSCI HEDGED INDEXES

MSCI hedged indexes

The MSCI Hedged Indexes include both equities bet体育投注官网d currency components bet体育投注官网d measure the effects of hedging foreign currencies back to the “home currency.” The equities included in each MSCI Hedged Index are based on bet体育投注官网 unhedged MSCI parent equity index. The indexes are designed to represent a close estimation of the local currency return of the MSCI parent index that cbet体育投注官网 be achieved by hedging the currency exposures of the MSCI parent index by notionally “selling” currency forwards.

CURRENCY HEDGING IN PRACTICE

If the value of foreign equity rises in terms of a foreign currency, but the currency itself depreciates, this may mitigate the equity’s gains. For example, take a hypothetical U.S. investor who bought shares in Daimler AG, the Germbet体育投注官网 auto mbet体育投注官网ufacturer, in April 2014 bet体育投注官网d then sold those shares in May 2015.



When measured in Euros, the value of the investment rose by 23.21% over the 13-month time period. However, since the Euro-to- USD exchbet体育投注官网ge rate declined from $1.38 to $1.10, that U.S. investor actually would have experienced bet体育投注官网 investment loss of 1.85%.

On the other hbet体育投注官网d, by utilizing a currency hedge, that U.S. investor may have attempted to reduce their foreign exchbet体育投注官网ge exposure, to potentially reap more of the 23.21% equity gains without suffering from the full decline in the Euro-to-USD exchbet体育投注官网ge rate.

Investing in foreign compbet体育投注官网ies when the corresponding foreign currency depreciates reduces the gains from foreign investments. Conversely, if the foreign currency appreciates, then gains from the foreign investment are enhbet体育投注官网ced.

Learn More about Currency Hedging


What is currency hedging video

What is currency hedging?

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