International shares hedged - as part of my super portfolio

I currently have an Australian super account with a balanced allocation. Noticed in the last three months there has been no returns from either this all the Conservative balanced. In fact most of the conservative offerings by Australian super are stagnant. Probably reflects the general state of the Australian share market. Many commentators talking up the benefits of International shares.

I am now contemplating allocating 20-25% of my portfolio to International shares hedged on the expectation that the Australian dollar will continue its slow downward slide. I'm conscious of the fact that the shares will be a bit more volatile I'm hoping to anticipate any major jolts and readjust my portfolio at short notice. Wonder if anyone else is been looking at this particular strategy.

you'd wanted unhedged international shares

hedged means that they have some contracts for a fixed rate to the AUD.

unhedged works well with a falling AUD

hedged will stop you loosing out to a rising AUD

I was looking at this today!

S&P Global 100 priced in AUD since 2006, not counting hedging costs (i.e. AUD - USD interest spread):



S&P Global 100 priced in AUD since 2006, counting hedging costs:



(the charts are not too different if you use S&P500 or whatever)

As you can see, hedging costs add up over the long term.

Also worth pointing out that AUD priced international stocks didn't seem to protect from the GFC to a great extent (since the collapse in stocks and collapse in AUDUSD was not synchronised at all), and didn't participate in the initial rebound since the AUD was moving higher much faster than global stocks rebounded. AUD investors in international shares didn't get any love until the AUDUSD weakness kicked off in mid 2011, and a lot of the nicest hedge property has already been eaten up with this "strategy" doubling since then.

Something to think about.

sydboy007 said:

you'd wanted unhedged international shares

hedged means that they have some contracts for a fixed rate to the AUD.

unhedged works well with a falling AUD

hedged will stop you loosing out to a rising AUD

Click to expand...

Thanks so they're $au hedged. Unhedged means bought in $US ?