US and Canadian Fund Managers Hedge FX Risk at Highest Level in Three Years, MillTech Survey Finds
Key Takeaways
- •MillTech found that 94% of surveyed US and Canadian fund managers are hedging forecastable foreign exchange exposure, compared with 85% a year earlier.
- •The June 2026 survey covered 250 firms managing between $500 million and $20 billion in assets.
- •Ninety-seven percent of respondents said they had lost money from unhedged FX exposure, with an average loss of $731,000.
- •More than half of respondents plan to extend the length of their currency hedges, and about 63% said longer hedge tenors are necessary in the current volatility environment.
- •Smaller funds managing $500 million to $1 billion are hedging at a higher rate than larger funds, at 98% versus 88%.
Nearly every mid-sized fund manager in North America is now actively hedging currency risk, a sharp increase that highlights how directly exchange-rate swings can affect portfolio outcomes when global markets are unsettled by geopolitics, trade disputes, and shifting central bank policy.
A survey by MillTech, a financial technology and cash management firm, found that 94% of US and Canadian fund managers are hedging their forecastable foreign exchange exposures — up from 85% a year earlier. Conducted in June 2026, the survey captured responses from 250 firms managing between $500 million and $20 billion in assets. Currency hedging of this kind typically relies on instruments such as forward contracts, which lock in exchange rates for future dates to protect portfolios from adverse currency moves.
The cost of doing nothing
A full 97% of the managers surveyed said they had suffered losses from unhedged FX exposure, with the average hit coming in at $731,000.
More than half of respondents said they plan to extend the length of their currency hedges going forward, and roughly 63% identified longer hedge tenors as a necessary adjustment given the current volatility landscape. That makes the survey notable not just for the breadth of hedging, but for the time horizon managers are choosing: longer-dated protection can reduce the need to react to every move in the foreign exchange market, though it also adds another layer of cost management to an already pressured return environment.
The drivers behind the shift are a familiar mix: geopolitical uncertainty, escalating trade disputes, shifting central bank policies, and Middle East instability. Fund size also plays a notable role. Smaller funds — those managing between $500 million and $1 billion — are hedging at a rate of 98%, compared with 88% for larger funds.
What this means for markets
The extension of hedge tenors is equally telling. When managers lock in longer-dated hedges, they are signaling that they do not expect volatility to resolve quickly.
One implication worth watching is the squeeze on returns as hedging costs rise with demand. FX hedging is not free: the cost of rolling forward contracts, particularly when interest rate differentials between countries are wide, eats directly into performance. For allocators and fund boards, that keeps currency risk management firmly tied to portfolio governance rather than treated as a back-office function. Managers are, in effect, choosing a known cost over an unknown risk.
