I am looking at investing in an S&P 500 index ETF and adding a few thousand each month - I am currently looking at Vanguards flagship VOO (in USD) and VOOV (in AUD).
I am a little confused as to how this works. Let me know I am am thinking about this the right way.
My thinking is that if I buy VOOV(AUD denominated) and the AUD weakens against the USD by say 10% and the S&P 500 goes up by 10% then I have effectively made no money as the raise in share price has been offset by a loss in the currency.
Conversely If I had bought VOO (in USD) and the same scenario occurred (share price up 10% and AUD down 10%) then I would have made a 20% return.
Does this sound right to you guys? I think I have it right but this is kinda baking my noodle as we have US companies but in an AUD denominated ETF.
I have a view that the AUD will weaken further over the medium term so was thinking about putting my money for now in VOO (and cop the exchange fee) and if the AUD weakens then I can stop adding to VOO and start putting it into VOOV.
Any advice greatly appreciated!