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I have a SMSF and currently have 100% of the members funds in domestic shares and cash.
With a declining AUD, I wish to allocate a portion of my funds into foreign currencies, most probably the USD, without exposure to the US equities market on the basis US stocks are currently overvalued.
Based on the above, how should I get exposure to the USD without investing in the equities markets? Should I open an account denominated in USD, with the intention of investing the USD funds into US equities if/once the US markets corrects? Or, should I purchase units in Platinum, or some other fund manager, which invests in US/foreign equities?
A: If you want to get some exposure to the USD and don’t want to take US equity exposure, then the 2 easiest ways to do it are:
a) open a USD bank account. Most of the major banks offer this facility, also Citibank and HSBC. Interest rate will be 0% or possible even negative, and there may be some small fees; or
b) buy a currency exchange traded fund. Betashares has a product that trades on the ASX and tracks the US Dollar – stock code is USD – essentially, a listed fund that is holds US dollars. See www.betashares.com.au.
