Hedged or unhedged: the currency bet inside an overseas fund
Explain what a currency-hedged fund does, roughly what hedging costs or earns, and when each version wins.
Module 8 of 26, Currencies, interest, and things that move together. Lesson 6 of 6, about 16 minutes.
The takeaway
A hedged fund removes most of the currency bet but costs roughly the interest-rate gap. Unhedged adds currency risk, but a falling AUD in a crisis often cushions the loss.
This page is a public summary. The full lesson has the worked examples, an interactive exercise and a short quiz, and sits in the course. Lessons 1 and 2 of Module 1 are free and the rest need a pass.
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