Hedged and unhedged options
The value of overseas investments can be
impacted by currency fluctuations.
The effects of currency movement on an
investment can be reduced by ‘currency
hedging’. This fixes the value of the
Australian dollar relative to one or a
number of foreign currencies.
An investment or asset class can be
either fully hedged, partially hedged or unhedged. A fully hedged portfolio is one
where all of the portfolio is protected from
the effects of currency exchange rates.
An unhedged investment or asset class is
not protected from these effects while a
partially hedged investment or asset class
is partly protected from these effects.
Currency hedging for Sunsuper options
Sunsuper has developed a policy, which
may be modified in the future, with respect
to the hedging of currency for each of the
Sunsuper diversified investment options
and the Sunsuper All Shares option.
- Sunsuper aims to fully hedge (that is, the impact of currency fluctuations are virtually eliminated) the currency exposure from all international fixed interest investments.
- Sunsuper varies the strategic level of foreign currency hedging in its investment options with international shares investments. An appropriate hedge is set for each option, taking into account its specific circumstances, asset allocation and risk and return characteristics. Active managers can also vary the level of hedging as a tactical decision to take advantage of expected currency movements.
Currency hedging for Other external manager investment options
The currency hedging policy for the Other external manager investment options is outlined in the investment panels for each relevant international option on pages 17 to 20 of the Investment guide.
