Investing in the US - Currency Risk

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Q. I’m thinking about investing in the US market and I’m worried about currency risk and how it might affect my portfolio, what can you suggest?

A. This depends on your time frame. There are 3 possibilities.

  1. Given that the SPA3 Investor methodology is a medium to longer term strategy, one could simply accept whatever currency fluctuations occur along the way and take the view that the portfolio is a US based portfolio and measure its progress as such.
  2. Alternatively, one could hedge against the currency fluctuations by taking an opposing position in AUD V USD.
  3. The other option is to simply choose to invest in your local (ASX or USA) market thereby avoiding any currency risk. Whichever you choose must be documented in your investment plan.