[dottjt]

I could be misunderstanding this, but you know that you can buy ETFs that are currency hedged?

Taking Vanguard for example, VGS is global equities, but VGAD is global equities that are AUD-hedged (my home country).

The only downside is that you pay more in fees (and they're less tax efficient). People generally don't bother with it though, because on a long enough time-line currencies usually revert to their long-term average, so if you're holding for retirement there's generally little point.

[rsynnott]

> The only downside is that you pay more in fees

This is a _huge_ downside for index funds, though. Even quite a small fee difference has a huge compounding impact over time; people often miss just how much.

AIUI, assuming you're investing in a global equity fund, currency hedging is almost never worth it. It _may_ be worth it in some cases if you're investing in a foreign index (eg S&P for Europeans), but even then not usually.

[dottjt]

It depends if you forsee potentially having to sell before retirement. Or if it may just happen out of your own circumstances.

Hedging is all about diversification at the end of the day. So it makes sense to hedge if you're coming close to retirement age.

[AnimalMuppet]

Let's say I'm close to retirement. And let's say I'm in US dollars, and the dollar isn't doing well right now, and might continue to not do well for a long enough time frame to matter to me.

On the other hand, my expenses will also be in US dollars. To what degree should I hedge against the dollar?

[dottjt]

Hard question to answer without understanding your circumstances.

Ultimately the point of hedging is to diversify. So the degree you should hedge is relative to the degree with which you have exposure to your home currency. So for example, if you already own a home in that country + you already own lots of shares in that home currency, then hedging might be less important.

The recommendation I've seen is around 25% of your portfolio in hedged global equities, assuming you have another 25-30% in non-hedged global equities.

[dottjt]

Oh right, sorry I completely misread this.

I'm actually not sure in your case. My guess is that it's something you wouldn't need to worry about, but I don't know.

[aswegs8]

TIL: currency moves have zero expected return

[dottjt]

You also can't predict when you might need to sell you stake, so that's ultimately the value of hedging. If you're forced to sell in 5-10 years, then hedging would be valuable.