Currency insights: beyond the lucky country

Market insights

Sunday 01 March 2015

Australia accounts for approximately 2% of the world economy1, and is heavily reliant on other parts of the globe for sustaining future growth and providing the goods we all consume. In the investment world, the vast majority of opportunities also reside offshore, and many Australian investors have embraced international investments. The average default Australian superannuation fund asset allocation now includes approximately one third of total assets offshore2 .

These international investments are naturally exposed to the swings in the value of the Australian dollar and other currencies and managing the performance of these investments in Australian Dollar (AUD) terms can be more complex than domestic investments. With the continued downward trend in AUD/USD, investors may wish to examine the impact that currency has on a portfolio including international investments and consider their approach to currency management.

This MIM Insights offers a refresher on currency risk and hedging in the context of managed funds.

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Any information on this page in relation to mortgages has been prepared by Macquarie Securitisation Limited (MSL) Australian Credit Licence (ACL) 237863 ACN 003 297 336.

Unless stated otherwise, this information has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502.

This information is provided for the use of licensed and accredited brokers and financial advisers only. In no circumstances is it to be used by a potential client for the purposes of making a decision about a financial product or class of products.

Except for Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502 (MBL), any Macquarie entity referred to on this page is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Cth). That entity's obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise.