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How does AUD Hedging on ASX SPX500 ETF work?

Discussion in 'International Markets' started by fraa, Dec 14, 2015.

  1. fraa

    fraa

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    Hello,

    As forex capabilities have been removed from IB retail accounts, I have been thinking about ways to be able to buy the US markets while removing AUD currency risk.

    Found an iShares AUD Hedged SPX500 ETF on the asx

    https://www.blackrock.com/au/individual/products/271027/

    Anyone know how the AUD hedging works ? I read the docs on the site but all it says is that they hedge but their hedges do not remove all currency movement risks. Does anyone have more detail on the process they use ?

    Like to know what risks I am exposed to before I buy this short or long term.

    Thanks !
     
  2. Quant

    Quant

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    Chart of SPX valued in AUDUSD , blue is SPX500 and Orange is AUDUSD , as you can see the fall from grace of AUD since start 2013 is responsible for > 50% of the gains , I'd suggest the prognosis for AUD hasn't improved , just giving you something to think about

    ScreenShot4258.jpg
     

    Attached Files:

  3. fraa

    fraa

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    Hi Quant

    Thanks for the charts ! I actually agree with you at the moment but as part of my DD I want to have the appropriate tool (and knowledge of all risks associated with said tool) to handle any changes in my outlook.

    So even though I dont expect to use it (yet?), I would like to have it in my toolbox in case circumstances change.
     
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