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Pros and cons of unhedged ETFs

  • 03-08-2014 6:44pm
    #1
    robp
    Banned (with Prison Access) Posts: 1,934 ✭✭✭


    Hi,
    I am wondering if there is a general view on the pros and cons of using US ETFs (domiciled in Europe) for a long investor (30+ years). I am considering an iShares ETF which is tracking the S&P500. I know hedged ETFS of this index are available but annual expenses are higher and there is tracking error. I appreciate that no one can foresee exchange rates 10 years into the future let alone 30 years but is it taking on an unreasonable level of risk for little benefit? For a very long term investor are risks hugely reduced?


Comments

  • #2
    Bateman
    Registered Users, Registered Users 2 Posts: 4,818 ✭✭✭Bateman


    By "hedged" are you suggesting holding EUR or GBP share classes of a fund tracking the S&P500?
    Or are you suggesting taking a smaller short position to hedge against an actual negative performance of the fund?


  • #3
    robp
    Banned (with Prison Access) Posts: 1,934 ✭✭✭robp


    Bateman wrote: »
    By "hedged" are you suggesting holding EUR or GBP share classes of a fund tracking the S&P500?
    Or are you suggesting taking a smaller short position to hedge against an actual negative performance of the fund?

    I am considering whether to use an iShare ETF which is Euro hedged (the iShares S&P 500 EUR Hedged UCITS ETF) as opposed to one that is not (the iShares Core S&P 500 UCITS ETF).


  • #4
    Bateman
    Registered Users, Registered Users 2 Posts: 4,818 ✭✭✭Bateman


    I guess even by holding the USD base class you’re taking a view re: need (or lack of) for hedging. “Doing nothing is doing something” and all that


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