In April we saw even further falls in the USD versus most currencies presumably due to the USD carry trade. We will have to wait until either a negative investment shock (e.g. china finally over-heating) or the Fed raises interest rates.

Given the instability of the carry trade, creating some form of insurance seems a very good idea. However, even with low rates, insurance still seems expensive, as the fund now spends 2% of assets for partial coverage, and will most likely extend that to 5% of assets over the next two years.

Insurance seems quite difficult to obtain at a reasonable price while avoiding insurance constructs that fail to work. We end up targeting exposures and hoping that we have covered our positions adequately.