The cost of hedging doesn't make sense... we now have to basically put in place what we will call natural hedges, which really means you have to invest in things that will give you a return that outpaces expected dollar depreciation... We'll continue to invest significantly the U.S. and U.S. dollar denominated assets. Because explicit currency hedging costs have risen to prohibitive levels (2.5% to 2.6%), massive sovereign wealth funds and global asset managers are forced to buy higher-yielding US assets, such as equities, to naturally outrun currency risk. This dynamic creates a structural, persistent bid for broad US equity indices from foreign institutional capital seeking absolute returns. LONG US equities as prohibitive FX hedging costs force global allocators to chase higher absolute returns in US markets rather than rotating out of them. A severe US economic downturn or significant multiple compression could cause equity returns to fall below the threshold needed to offset currency depreciation, breaking the natural hedge strategy.