| To Hedge or not to Hedge? Posted: 30 Aug 2021 02:31 AM PDT Hey Guys, Im new to the Reddit community, and trying to get some feedback regarding currency hedging with ETF investing. Would love to hear your thoughts? :)
Im 30yrs old, and just started my investment journey of buying and holding for the long term (making semi-annual contributions) a small handful of diversified ETFs. My core ETF is VDHG, and I'm looking at adding NDQ.
From what I've researched it seems that over the longggg term (15+yrs), being unhedged generally provides better results than hedged. But I'm wondering if it would be even better to have both NDQ and its Hedged version HNDQ, and then buy in to either depending on where the Aussie Dollar sits vs US Dollar. I also understand that its better to buy in the hedge ETF when the AUD is appreciating and when its dropping buy into the unhedged version. My stratergy;
The long term average of the AUD is approx 72 cents, and its rarely below 55cents and rarely above 90cents. If AUD sits at 72cents I'd buy 50%NDQ/50%HNDQ. For every cent the AUD dropped I'd buy 3% more Hedged eg 71cents = 47%NDQ/53%HNDQ, 70cents = 44%NDQ/56%HNDQ ... until at 55cents I'm buying 0% unhedged and 100% hedged. Obviously, the opposite would apply for when the AUD rises.
Would this be a better long term strategy to maximise returns than just investing exclusively into NDQ? And/or, do you have a better way of dealing with currency flucs with long term ETF investing.
Would love to hear your thoughts!
Cheers,
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