Hedging: MSCI discovers no free lunches

In April, MSCI Barra issued a research report: Currency hedging: a free lunch? This immediately reminded me of the mantra one of my old brokers repeated whenever I met him for lunch: "No biz, no fizz." In other words, as we all know and as I used to say, you don’t get nuffing for nuffing. The report is well researched but ultimately somewhat simplistic. So much so, that I was moved to ask if it should be subtitled: Stating the bleeding obvious. In effect, it says that if you hedge, you might increase your risk and might not make as much money as if you didn’t.