Currency insights: beyond the lucky country

Australia accounts for approximately 2% of the world economy1, and is heavily reliant on other parts of the globe for sustaining future growth and providing the goods we all consume. In the investment world, the vast majority of opportunities also reside offshore, and many Australian investors have embraced international investments. The average default Australian superannuation fund asset allocation now includes approximately one third of total assets offshore2.

These international investments are naturally exposed to the swings in the value of the Australian dollar and other currencies and managing the performance of these investments in Australian Dollar (AUD) terms can be more complex than domestic investments. With the continued downward trend in AUD/USD, investors may wish to examine the impact that currency has on a portfolio including international investments and consider their approach to currency management.

This MIM Insights offers a refresher on currency risk and hedging in the context of managed funds.

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