So let's break down the mechanics and see where the share class hedge could get a little complex.
The first thing to consider is the hedge structure itself. So for your hedged share class, you're using FX forwards and swaps to lock in the exchange rate. But it's not a one-time trade. These forwards and swaps have maturity dates, so you're constantly rolling them forward, replacing expiring contracts with new ones at current market rates to maintain that continuous coverage throughout the life of your fund.
The second thing to consider is adjusting for new investor flows. So you need to factor in subscriptions and redemptions into this new class. So when you add a dollar of investor money and use it to purchase foreign securities, you've now got an additional dollar of new currency exposure that needs to be hedged. And the same applies when an investor redeems - that exposure goes away and you unwind the corresponding hedge. And you're doing this in real time every single day.
And the third aspect to consider is the underlying performance. So as the underlying investments of the native fund fluctuate, the notional amount of currency exposure changes. So you're constantly recalculating the hedge amount at the share class level to account for performance, subscriptions, redemptions, all of it, to make sure that coverage stays aligned. And these requirements can add in various elements of operational and financial risk, if not carefully considered.