GLOBAL - The 38% appreciation of the Australian dollar against the US dollar in 2003 wiped 7% off returns on international share holdings for Australian investors, according to InTech Financial Services.
The gap in returns this year so far between hedged and unhedged international shares has been just over 12%.
“With the average growth fund in the InTech Survey having about 25% unhedged exposure, this exposure has impacted returns by 3% over this period,” said InTech portfolio manager Chris Thompson.
“Over the last 12 months, the impact is even more staggering. A gap of 28% has led to a 7% reduction in returns.”
Had funds hedged their foreign currency exposure 100%, the median return in the last year may have been as high as 17%, said Thompson.
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