Question of the Week

Questions of the Week

Co-founder of the Switzer Report
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Question 1: I read with great interest Charlie Aitken’s piece on investing overseas. I am interested in which listed Managed Funds you would recommend. I understand what Hedged and Non Hedged is but am not sure which funds fit into these categories.

Answer: In terms of actively managed funds, I would consider funds such as MGE from Magellan, WQG which is managed by WCM, and potentially PIXX from Platinum. These are all traded on the ASX.

Hedged versus unhedged is always an interesting question, with some managers arguing that over the long run, it doesn’t make that big a difference. However, when the Aussie dollar is “oversold” and arguably below its long-run value, the case for hedging is somewhat stronger.

Magellan offers a hedged version through MHG.

For passively managed index tracking funds, consider IVV from iShares, which tracks the US S&P 500. There is also a less liquid hedged version, IHVV. Vanguard’s International Shares Index Fund (VGS) or its currency hedged version, VGAD should be considered.

Question 2: In his article, Charlie Aitken wrote: “Why don’t you own any global investments in global dollars?” and recommends Alphabet. Which is preferable: GoogL:US or Goog:US ?

Answer: A few years back, Alphabet shares were split into two (mainly so that the founders could maintain control), one with voting rights, the other without. GOOGL has the voting rights, GOOG doesn’t. Both have the same economic interest.

GOOG trades at a discount to GOOGL and you can look at charts to show that this discount doesn’t move around too much. Because there are also some “super-voting” shares, it doesn’t really matter that much whether you invest in GOOG or GOOGL.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.

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