How much should investors currency hedge Japanese equities?

With yen strength providing a near 25% swing in returns for sterling investors in 2016, Paul Milburn, co-manager of the Lowes multi-asset RHFS Diversified Strategy fund, outlines his strategy for protecting against future yen weakness.

For many years, the question of whether equity fund managers, particularly those investing in overseas equity markets, hedge their foreign currency positions has been discussed. The most common response is that currency is not hedged as managers are more confident being stockpickers rather than currency forecasters. Instead, fund managers prefer to focus on the impact of currency moves on the earnings of the underlying companies in which they invest.   Hedge fund quants beat active stockpickers in pay game Furthermore, fund managers have long argued currency pairings move in cycles...