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  1. #31
    Guru justakiwi's Avatar
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    Can somebody explain to me what "currency hedging" means (in layman's terms)? Is an ETF that is currency hedged a better choice than one that isn't?

  2. #32
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    Quote Originally Posted by justakiwi View Post
    Can somebody explain to me what "currency hedging" means (in layman's terms)? Is an ETF that is currency hedged a better choice than one that isn't?
    Depend's which way the currency goes.

    If it is hedged, you get the return of the index. If it is unhedged, you get the combined return of the index and the foreign exchange movement.

    So if the US index goes up 10%, but the NZD increases in value against the USD by 10%, your return is 10 for a hedged, but 0% for an unhedged.*

    * I think I got that right and obviously there is a cost to an index fund and to a hedging policy so the returns aren't exact.

  3. #33
    Guru justakiwi's Avatar
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    Quote Originally Posted by Harvey Specter View Post
    Depend's which way the currency goes.

    If it is hedged, you get the return of the index. If it is unhedged, you get the combined return of the index and the foreign exchange movement.

    So if the US index goes up 10%, but the NZD increases in value against the USD by 10%, your return is 10 for a hedged, but 0% for an unhedged.*

    * I think I got that right and obviously there is a cost to an index fund and to a hedging policy so the returns aren't exact.
    Ah OK. So hedged would definitely be an advantage in that case. I can't seem to find any info re that around the Smartshares funds. Might have to dig a bit deeper.

  4. #34
    Reincarnated Panthera Snow Leopard's Avatar
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    It is a moo point (see video) whether currency hedging is of any benefit in long term regular investing as the gains and losses tend to even out over time and you are left with an extra expense diminishing overall returns.



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    Paper Tiger
    om mani peme hum

  5. #35
    Guru justakiwi's Avatar
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    Quote Originally Posted by Paper Tiger View Post
    It is a moo point (see video) whether currency hedging is of any benefit in long term regular investing as the gains and losses tend to even out over time and you are left with an extra expense diminishing overall returns.

    Best Wishes
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    Joey and I think you're right

  6. #36
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    Quote Originally Posted by justakiwi View Post
    Ah OK. So hedged would definitely be an advantage in that case. I can't seem to find any info re that around the Smartshares funds. Might have to dig a bit deeper.
    I don't think any of the smartshares have any currency hedging options

  7. #37
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    Moo!! Just as well we aren't talking about mootual funds
    I agree that (at least ) not all overseas investments should be hedged.

    Harvey said that about Kingfisher .... I tend to agree with what he's saying though.
    For clarity, nothing I say is advice....

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