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#1
10-04-2007, 09:29 AM
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Do ETFs traded in USD carry a currency risk?
Hi, I want to by some ETFs (index funds). I'm looking mostly at iShares and since I don't even want to pick some specific segment/country I'm just thinking of investing in iShares MSCI World, as that seemed the most "generic" equity investment I could find.
But it's traded in USD and although it seems to me it probably does not carry a USD currency risk, perhaps it does. I (perhaps unreasonably) believe USD will fall further and thus don't want to hold it. Do ETFs traded in USD carry a USD currency risk? 
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#2
10-04-2007, 12:45 PM
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Re: Do ETFs traded in USD carry a currency risk?
As I understand it if things are valued in USD (like oil and gold) and the value of the dollar drops, it will not lower the value of the item priced in USD it will just cost more USD to purchase it.
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#3
10-04-2007, 01:11 PM
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Re: Do ETFs traded in USD carry a currency risk?
the answer is no.
it doesn't matter what currency it trades in. what matters is what its invested in.
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#4
10-04-2007, 01:42 PM
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Re: Do ETFs traded in USD carry a currency risk?
if they do not hedge their currency exposure and the dollar weakens, YOU MAKE MORE MONEY, not less.
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#6
10-04-2007, 02:09 PM
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Re: Do ETFs traded in USD carry a currency risk?
[ QUOTE ]
if they do not hedge their currency exposure and the dollar weakens, YOU MAKE MORE MONEY, not less. [/ QUOTE ] only if you assume she is american which I doubt by the question.
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#7
10-04-2007, 03:02 PM
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Re: Do ETFs traded in USD carry a currency risk?
[ QUOTE ]
[ QUOTE ] if they do not hedge their currency exposure and the dollar weakens, YOU MAKE MORE MONEY, not less. [/ QUOTE ] only if you assume she is american which I doubt by the question. [/ QUOTE ] agreed
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#8
10-04-2007, 04:25 PM
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Re: Do ETFs traded in USD carry a currency risk?
[ QUOTE ]
the answer is no. it doesn't matter what currency it trades in. what matters is what its invested in... which in this case does have currency risk because the MSCI world index invests all over the globe without hedging the currency risk to which it is exposed based on the proportion of investments in varying country's equity markets [/ QUOTE ]
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#9
10-04-2007, 08:35 PM
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Re: Do ETFs traded in USD carry a currency risk?
I'm not sure what your 'home currency' is, but ishares are by BGI, were one of the first to provide ETFs to UK consumers. As such, their global funds such as this one tend to have a UK bias.
You should check their website as it will disclose whether or not currency risk is hedged (all the UK fund/ETF providers I know of don't hedge their currecny risk). At a guess, I would say that 50% of the fund is invested in stocks priced and traded in $US, with Japan and UK markets next, followed by the remaining G8 folk. This might suggest that 50% of the fund is exposed to The $US. As previously stated, it matters more what the currency the fund is invested in than what currecny it's priced in.
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#10
10-05-2007, 02:57 AM
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Re: Do ETFs traded in USD carry a currency risk?
OK, I got it; thanks, everyone. My home currency is EUR.
And I figured to lessen the USD risk I'll buy more of iShares MSCI EAFE instead (which is world minus the America) instead of MSCI World which indeed has a lot invested in USD. Too bad I found out only a few days ago about those ETFs (I live in a cave so news is slow) as I have bought myself actively managed higher overhead funds instead previously.
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