How Currency Hedging Can Boost Yield

Seeking AlphaFinancial Advisor | Today's Market | Market OutlookHow Currency Hedging Can Boost YieldSep. 27, 2020 3:31 PM ET|| Includes: AGZ, AWTM, BBSA, BIL, BILS, BKT, BTYS, CLTL, DFVL, DFVS, DTUL, DTUS, DTYL, EDV, EGF, FIBR, FLAT, FLGV, GBIL, GNMA, GOVT, GSY, IEF, IEI, IVOL, LDSF, LTPZ, MBB, OPER, PBTP, PLW, PST, RINF, RISE, SCHO, SCHP, SCHQ, SCHR, SGOV, SHV, SHY, SPIP, SPMB, SPTI, SPTL, SPTS, STIP, STPP, STPZ, TAPR, TBF, TBJL, TBT, TBX, TDTF, TDTT, TFJL, TFLO, TIP, TIPX, TIPZ, TLH, TLT, TMF, TMV, TTT, TYBS, TYD, TYO, UBT, UDN, USDU, USFR, UST, USTB, UUP, VGIT, VGLT, VGSH, VMBS, VRIG, VTIP, VUSTX, ZROZby: AllianceBernstein (AB)AllianceBernstein (AB) Mutual fund manager, long-term horizon, portfolio strategySummaryAB has been a longstanding proponent of investing globally within the bond markets.
We advocate going global on a currency-hedged basis.
In our view, US investors should remain in global bond markets because those negative non-US yields can be turned into an opportunity, thanks to currency hedging.
By Erin Bigley

Transcript AB has been a longstanding proponent of investing globally within the bond markets, but understandably, many investors are questioning why they'd want to invest globally when so much of the non-US bond markets are trading with negative yield.
We advocate going global on a currency-hedged basis. So, in our view, US investors should remain in global bond markets because those negative non-US yields can be turned into an opportunity, thanks to currency hedging.
Hedging foreign currency back into US dollars accomplishes two things. First, it lowers the volatility of the portfolio while preserving global bonds' diversification benefits. Second, in today's markets, it can actually increase yield.
When buying a hedged global bond, you've got to look not just on the yield of the bond in its base currency, but also consider what is the currency hedge going to give you or take from you? The currency hedge is basically... Read more