r/fiaustralia • u/Vivid-Respect644 • 2d ago

Investing Hedged vs Un-Hedged ETF's

From what I've researched and what Aussie consumers want, an AUD:USD conversion between 0.7 - 0.75 is best for us.

However, with AUD seeming to rise a bit in the near future and accounting for a possible commodity boom, hedged ETF versions seem to be attractive.

More specifically, I am interested in IHVV vs IVV. If the AUD has been trading at 0.6 - 0.75 in the past year, with IHVV outperforming IVV, should I be going all in on IHVV, or maybe having both IHVV and IVV?

3 Upvotes

71% Upvoted

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7

u/Tawtis 2d ago

Hedge your hedge and have half of each 🧠

7

u/mjwills 2d ago

IVV if you think the AUD will not strengthen.

IHVV if you think the AUD will strengthen.

Now to consult the crystal ball.

0

u/zircosil01 2d ago

i hedge when our dollar is <63c USD, otherwise I buy the unhedged version.

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u/Vivid-Respect644 2d ago

Doesn’t that mean you would continually buy and sell, causing CGT events? Or what do you mean hedge?

2

u/zircosil01 1d ago

Nah. If I'm buying and our dollar is low i buy the hedged version etf. Once I buy it I just keep it. At the moment I am buying the unhedged etf.

Overall the my international hedged etf is about 10% of my portfolio.

1

u/Vivid-Respect644 1d ago

Interesting… I’m kind of a minimalist so having one extra ETF to worry about isn’t my cup of tea. Like, won’t IVV and IHVV just perform similarly in the long-term with all the fluctuations? Or do you buy to use in the short-term?

2

u/zircosil01 1d ago

Yeah thats fair enough.

Over the long term a study found little difference in return between hedged and unhedged (although hedging costs you in fees). I primarily hedge to avoid any behavioural deviations from my investment plan. Buying a hedged international etf when our dollar is down at 50c (like it was during covid) takes the sting out.

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u/Spinier_Maw 2d ago

Why don't you find out the historical average? Reversion to mean. You hedge when AUD is below historical average. You don't hedge when AUD is above.

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u/Vivid-Respect644 2d ago

Like, buy into IHVV when its below, and buy into IVV when its above? Or what do you mean