Using tools like forwards and options, currency-neutral funds hedge foreign-exchange risks. Investing in currency-neutral funds can protect against losses from unfavorable exchange-rate shifts.

Currency is often treated as a background variable that can be hedged away, neutralized, or simply ignored. Read more here.

This article appears courtesy of Global Investor. Here’s an opportunity for European pension funds : they, and other foreign investors, can now delegate responsibility for hedging currency exposure to ...