Taking advantage of the high dollar by investing overseas?

[tims]

I think my one of my best investments was when I invested in international bonds way back when the the dollar was strong (as now). I cashed in when the dollar had dropped significantly and made a good return with a combination of the actual investment return and the drop in the value of the dollar.
Now, with the dollar probably at all time highs against a number of foreign currencies, has anyone taking advantage of this - international bonds, shares etc in the U.S. or Europe....?
One thing I don't know much about is how currency hedging works - I guess I'm thinking of international bond or share funds that have hedging. Does hedging take away any potential gains that could be made when or if our dollar drops?

Thanks for any replies.

Tim

 

[prawn_86]

Hi Tim,

If you are looking for a drop in the AUD why not simply sell the AUD/USD? This would avoid you having 2 lots of exposure

 

[tech/a]

I think my one of my best investments was when I invested in international bonds way back when the the dollar was strong (as now). I cashed in when the dollar had dropped significantly and made a good return with a combination of the actual investment return and the drop in the value of the dollar.
Now, with the dollar probably at all time highs against a number of foreign currencies, has anyone taking advantage of this - international bonds, shares etc in the U.S. or Europe....?
One thing I don't know much about is how currency hedging works - I guess I'm thinking of international bond or share funds that have hedging. Does hedging take away any potential gains that could be made when or if our dollar drops?

Thanks for any replies.

Tim

One is going to profit and the other will lose as in any hedge its a temporary measure.

The real risk to anyone who has taken advantage of the strong $ is that the US wont keep
printing money and as such diluting the value of the USD and currencies based on the USD and the USD it self will strengthen and youll see a sharp fall in currencies paired to it.

This will of course be clear in the coming months.- March 1 enacting Tax law---May new debt ceiling reached.

Here is a pretty good commentary and you may also be interestest in the further discussions on the effect on Bonds at the bottom of the artical.

http://bonds.about.com/od/Issues-in-the-News/a/What-Is-The-Fiscal-Cliff.htm

I find this time in world economics absloutely enthralling!
Boring as rabbit food to most but high on the Duck scale.

 

[McLovin]

I think my one of my best investments was when I invested in international bonds way back when the the dollar was strong (as now). I cashed in when the dollar had dropped significantly and made a good return with a combination of the actual investment return and the drop in the value of the dollar.
Now, with the dollar probably at all time highs against a number of foreign currencies, has anyone taking advantage of this - international bonds, shares etc in the U.S. or Europe....?
One thing I don't know much about is how currency hedging works - I guess I'm thinking of international bond or share funds that have hedging. Does hedging take away any potential gains that could be made when or if our dollar drops?

Thanks for any replies.

Tim

You could buy Australian shares with a USD exposure. Realistically, the AUD will start to fall when US interest rates start to rise, which will happen once they start slowing liquidity. Something like QBE has a couple of kickers in it, firstly it's highly exposed to the USD and secondly it's highly exposed to the US interest rates. Not a recommendation, just showing their are ways to play the currency domestically.