Geopolitical uncertainties loom, 94% of North American funds hedge forex risks, reaching a four-year high

According to Jinse Finance, a survey by MillTech, a company specializing in foreign exchange and cash management solutions, reveals that against a backdrop of increasing geopolitical uncertainty, the proportion of fund managers in the United States and Canada opting for foreign exchange hedging has risen to 94%, reaching the highest level in at least four years.

The survey shows that 94% of the institutions surveyed are currently hedging foreign exchange risks, a significant increase from 85% in 2025, marking the highest level in four years.

It is noteworthy that small funds are more inclined to engage in foreign exchange hedging compared to large funds, with ratios of 98% and 88% respectively. This may reflect that, due to their smaller asset size, any losses resulting from unhedged foreign exchange exposure have a greater impact on small funds, especially in the context 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 period is their preferred approach to political-driven US dollar fluctuations.

The survey shows that over one-third of respondents plan to increase their hedging ratio, while nearly one-quarter of respondents plan to decrease their hedging ratio.

In the first quarter of this year, due to geopolitical tensions, some funds suffered losses from unhedged foreign exchange exposures. The average loss was $730,665, with most losses ranging between $100,000 and $499,999, but more than 12% of institutions reported losses between $1 million and $4.9 million.

The survey report notes: “This serves as a reminder that even if a fund overall benefits from exchange rate changes, individual unhedged exposures can still come at a high cost.”

MillTech conducted this survey in June this year among 250 mid-sized asset management firms in the United States and Canada.