A new survey from foreign exchange and cash management specialist MillTech reveals that the proportion of US and Canadian fund managers hedging their currency exposure has climbed to 94%, marking the highest level in at least four years amidst escalating geopolitical uncertainty.

The findings show a significant jump from the 85% recorded in 2025, with 94% of institutional respondents now actively hedging against foreign exchange risk. Notably, smaller funds are more inclined to hedge than their larger counterparts, with adoption rates of 98% and 88% respectively. This divergence likely reflects the greater impact that unhedged currency losses can inflict on smaller funds due to their more limited asset bases, particularly during periods of heightened market volatility.

Beyond increasing hedge ratios, North American funds are also altering their hedging strategies. According to the survey, 63% of respondents identified extending hedge tenors as their preferred approach to navigating politically-driven US dollar fluctuations. Looking ahead, more than one-third of participants plan to raise their hedge ratios, while nearly a quarter intend to lower them.

During the first quarter of this year, geopolitical tensions caused losses for some funds with unhedged currency positions. The average loss stood at $730,665, with most individual losses ranging between $100,000 and $499,999. However, over 12% of institutions reported losses between $1 million and $4.9 million. The report notes that this serves as a stark reminder that even when a fund benefits overall from currency movements, specific unhedged exposures can still incur significant costs.

MillTech conducted the survey in June, polling 250 mid-sized asset management firms across the United States and Canada.