The shadow of geopolitical uncertainty looms, with 94% of North American funds hedging foreign exchange risks reaching a four-year high.

A survey conducted by MillTech, a company specializing in foreign exchange and cash management solutions, shows that amid increasing geopolitical uncertainty, the proportion of fund managers in the United States and Canada opting for foreign exchange hedging has risen to 94%, the highest level in at least four years. The survey reveals that 94% of the surveyed institutions are currently hedging foreign exchange risks, significantly up from 85% in 2025, marking the highest level in four years. Notably, small funds are more inclined to engage in foreign exchange hedging than large funds, with proportions of 98% and 88%, respectively. This may reflect that, due to their smaller asset sizes, any losses incurred from unhedged foreign exchange exposures have a greater impact on small funds, especially in a climate of heightened market volatility. In addition to increasing the hedging ratio, North American fund companies are also adjusting their hedging strategies. 63% of respondents indicated that extending the hedging duration is their preferred strategy to cope with politically driven fluctuations in the U.S. dollar. The survey indicates that over one-third of respondents plan to raise their hedging ratios, while nearly a quarter plan to lower theirs. In the first quarter of this year, some funds suffered losses due to unhedged foreign exchange exposures as a result of geopolitical tensions. The average loss was $730,665, with most losses ranging from $100,000 to $499,999, but over 12% of institutions reported losses between $1 million and $4.9 million. The survey report points out: This serves as a reminder that even if a fund overall benefits from currency fluctuations, individual unhedged exposures can still incur significant costs. MillTech conducted this survey in June of this year with 250 mid-sized asset management companies in the United States and Canada.