May 6, 2025 (NO COMMENTS)

European asset managers and pension funds are adding more currency hedges to their US equity portfolios following a breakdown of the so-called dollar smile.

The greenback typically appreciates when US stocks are booming or under extreme stress. For foreign investors, the phenomenon – known as the dollar smile – offers a natural hedge against sharp selloffs in US holdings.

The tariffs unveiled by US president Donald Trump on April 2 turned the relationship on its head. The S&P 500 shed 5% through