In this tricky time for private real estate investment, it will be the folk able to successfully navigate the supposedly fringe elements of a transaction that are likely to gain an advantage. And one increasingly important area for both sides of the capital conversation to navigate with dexterity is currency hedging.

Whether capital or capital manager, an acute awareness of the ramifications of the movements of currencies relating to your transaction is, in the current context, up there with running the hypotheticals on other central considerations such as interest rates.

As you’ll read in our special report on currency hedging, many of the more important denominations have moved meaningfully in short spaces of time. In one week in January, the euro became as much as 3 percent cheaper versus sterling. In a year, a dollar bought up to 7 percent more euros. These margins can be the difference between one risk-return strategy and another – even if the actual real estate thesis has been executed to perfection.

In 2016 alone, the Australian and New Zealand dollars have lost 4 percent each against the greenback and PERE heard how one global private equity firm was consequently struggling to raise its first Asia fund after deals in these countries lost value in dollar terms. They were supposed to seed the vehicle, but, now, the firm is having to defend its hedging tactics to prospective investors rather than pitch to them the advantages of its strategy.

Conversely, you’ll also read how one European fundraise took advantage of the euro’s relative attractiveness to dollar-based investors to entice a large contingent of them into its fund. While Europe’s major markets are cyclically more inviting to many investors stateside at the moment the currency situation sure is playing its part.

The largest firms in the market are supposed to be the consummate hedgers, smaller firms either don’t hedge or do so on a case-by-case basis and there’s a real mix of attitudes within the investor community. But whatever the house position, it is well worth stress-testing on today’s evidence, either for defensive or offensive purposes. The associated costs in doing so might stack up. The costs of doing nothing, though, might be far worse. Today hedging should not be considered a fringe element.