James Holt: How to protect global equity returns from currency swings

JAMES HOLT, head investment specialist at Perpetual, explains how currency movements can significantly influence global investment returns for Australian investors

He outlines the key difference between hedged and unhedged options, and how investors can choose whether to retain exposure to foreign exchange movements or focus solely on the performance of the underlying stocks.

Here’s an excerpt from the video podcast:

“With global portfolios, especially from an Australian investor’s perspective, our currency can be quite volatile.

"We want to give investors the option of being fully hedged against that currency risk or unhedged.

“With an unhedged fund, you will get the return of the underlying stocks, but you also get the movement of the currency as well.

“When you’ve got a global fund that’s hedged, it’s simply removing the currency risk from the portfolio.”