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The possibility that a negative event (such as a loss) will happen.
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Why using 3 months forward to hedge fx risk on a fund of funds portfolio?
In my previous job, a fund of funds, they used 3 months forward FX contracts (renewed every 3 months) to protect their portfolio against currency risk. … I don't understand why it is protecting the portfolio's positions against currencies risk during the undetermined positions lifetime time.
Maybe, I'm unclear. …