What role should FX hedging play in investments today?

James Hamel, portfolio manager on the Artisan Partners growth team, looks at how to deal with foreign exchange volatility and find companies capable of resilience in this environment

Heightened currency volatility over the past few months has reinvigorated debate about hedging.  The hedging decision should, in theory, be driven primarily by an investor's time horizon and fundamental approach to investing. There are certainly many scenarios in which hedging can be a useful strategy. However, for long-term investors focused on finding good businesses with compelling profit cycles trading at attractive valuations, attention spent trying to time short-term currency swings is typically more profitably spent elsewhere.  Opportunity costs  It is important to note he...