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The S&P 500 is up 35% from its low but the loonie has also risen in value up from 77 cents to 85 cents or 10% over the same time frame. Therefore, a Canadian investors who have not hedged their currency exposure did not enjoy the same upside as an US investor (and to be fair, did not experience the same downside when the markets tanked).
My rather strong opinion has been that the costs of hedging are certain (many estimates run at 1% per year) and the benefits are debatable. Unhedged investors take currency risk in the hope that it will provide diversification benefits. It seems to be working but it isn't as much fun when it is working against you
The Costs of Currency Hedging
The Costs of Currency Hedging: Taxes
Revisiting the Tracking Error For Currency-Hedged Funds
Let's open up this topic for discussion. Many are of the opinion that the strength of the US dollar over the past year was a temporary phenomenon within a secular bear market in the dollar. What if anything are you doing to hedge against a falling dollar (or rising loonie)?
My rather strong opinion has been that the costs of hedging are certain (many estimates run at 1% per year) and the benefits are debatable. Unhedged investors take currency risk in the hope that it will provide diversification benefits. It seems to be working but it isn't as much fun when it is working against you
The Costs of Currency Hedging
The Costs of Currency Hedging: Taxes
Revisiting the Tracking Error For Currency-Hedged Funds
Let's open up this topic for discussion. Many are of the opinion that the strength of the US dollar over the past year was a temporary phenomenon within a secular bear market in the dollar. What if anything are you doing to hedge against a falling dollar (or rising loonie)?