So why is this blowing up right now? There are two big things happening.
First: currency volatility. In the current environment, equity and fixed income volatility have gotten the bulk of the market's attention. Meanwhile, FX volatility has been quietly trending upwards and having major knock-on effects on global investment performance. And when you're managing global portfolios, all risks should be considered, including foreign exchange. When FX swings are creating unpredictable volatility in your returns, this may be eating into your core investment philosophy. Investors want exposure to global markets. That's where diversification and opportunity live. But fewer and fewer are comfortable with currency risk. So they're asking for hedged versions of successful products.
Second, the product innovation crunch. Think about the asset management industry right now. Building a genuinely differentiated investment strategy is harder than it's ever been. A hedged share class is a fast, inexpensive, and safe way to launch a differentiated product.