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If I were to invest $A100k in the Platinum International Fund (just as an example) and the Aussie dollar fell 15% tomorrow, would that give me a 15% profit, providing I sold my holding in the fund immediately thereafter – or as an inexperienced investor, am I missing something?
A: Thanks for the question.
In a fund that was “unhedged”, all things being equal, then yes, you would expect a profit of approximately 15% (due to the mathematics of percentages, it is actually 17.4%).
However, from recall, Platinum International Fund actively manages the currency risk. This means that they will at times be hedged, partially hedged or unhedged - so it is largely impossible to say how a fund employing an active management strategy will perform. Hopefully, they will get it right more often than not – so you should benefit from a currency fall, and not suffer too much if the currency rises.
Hope this helps.
