• Currency movement has the potential to significantly impact the net returns of an international equity exposure, for better or worse. 
  • Currency strength and weakness can vary over short, mid, and long terms, making it difficult to determine the direction foreign currencies may take. 
  • Near-zero correlation has been observed between foreign currency movement and foreign equity movement, making it difficult to replicate the same view across equities and currencies.1 
  • There are pros and cons for both including and excluding currency exposure. 
  • A neutral level of 50% exposure to currencies can be an efficient way to implement a low-cost, passive exposure to international developed market equities, providing some supplemental performance benefits by incorporating currencies while lowering potential negative impacts.