Money managers in the United States and Canada are experiencing their highest level of currency hedging activity in three years, according to the latest MillTech survey. The currency-hedging platform found that 94% of fund decision-makers are now hedging currency risk, representing the most since the firm began tracking this metric in 2023. This represents an 8% increase from the same period in 2025, with hedge ratios rising to 48% from 45% last year. The survey of 250 senior finance decision-makers (158 in the U.S. and 92 in Canada) reflects a significant shift in risk management strategies among North American investment managers.
According to the MillTech survey, U.S. trade policy and questions about monetary policy moves by the Federal Reserve and Bank of Canada were each cited by 34% of respondents as the biggest external factor influencing their FX hedging strategy. Middle East geopolitical tensions followed closely at 31%, indicating that funds are managing several overlapping sources of risk rather than one dominant driver. As reported by MillTech, these factors are making currency moves harder to predict and investment decisions more challenging for fund managers.
The increased hedging activity comes after 97% of funds experienced losses averaging US$731,000 during the first quarter from unhedged FX exposure due to geopolitical uncertainty, according to MillTech. The survey found that 35% of funds are planning to increase their hedging further, while 63% intend to extend their hedge lengths. Some firms experienced higher losses, with 12% reporting losses between $1 million and $4.9 million. The respondents represent firms with assets under management ranging from US$50 million to more than US$20 billion.
Reflecting a more cautious approach, MillTech reports that hedge ratios rose from 45% in 2025 to 48% in 2026, while average hedge lengths increased from five months to around five and a half months as managers sought greater certainty amid ongoing policy and geopolitical risks. The shift in hedge tenors was notably away from the most popular basket – from 71% hedging four-to-six months in 2025, this basket fell to just 44%, with one-to-three months (24% from 15%) and seven-to-nine months (24% from 13%) taking up much of the slack. Equally, those hedging 10-12 months out rose to 8% from just 1% in 2025.
Despite the increased hedging activity, survey respondents reported several barriers to implementing hedging strategies. Among the small group of respondents that do not currently hedge, burdensome hedging infrastructure was the most common barrier at 56%, followed by a preference to deploy capital elsewhere (38%) and cost (31%). Cost pressures are rising across the wider market, with 96% saying their hedging costs had risen over the past year and 60% reporting increases of at least 50%. The average increase was 57%, while 11% said costs had more than doubled. Additionally, 89% reported that their credit provider had increased interest rates or fees.
There are signs of greater automation in the industry, with MillTech finding that in-house IT systems (50%) and UIs (42%) have become the most common methods for instructing FX transactions, marking a shift away from manual forms of instruction. Email use fell from 60% in 2025 to 36% in 2026, while phone use declined from 53% to 31%. "North American fund managers are being pulled in several directions at once," observes Eric Huttman, CEO of MillTech. "Trade tariffs, shifting central bank expectations and geopolitical tensions are making currency moves harder to predict and investment decisions harder to make."
