1Semana·

Hedged S&P or just hold S&P?

So far I have not looked into the currency risk, so my question to you is. Is it still worth switching to a hedged S&P at the present time?

As there will always be down phases in the market, I would rather switch now than in 20 years.

@Epi has pointed to the currency cycle several times recently, but it is not entirely clear to me whether we should be in the "downturn" or already at the bottom😬.

What are the negative aspects of a hedged S&P?

Higher TER? What else?

Which ETF would you suggest?

IE00B3ZW0K18 (ishare) $IUSE (+0,25 %)

IE00BM67HW99 (Xtrackers) $XDPE (+0,08 %)

Thank you for your answers.

$CSPX (+0,43 %)
$VUSA (+0,42 %)

27 Comentarios

Banana M.@Banana_Millionaire

1Semana

Short to medium term hedged.
Long-term 10 years+ unhedged.

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Ricardo M.@rjmestre

1Semana

@Banana_Millionaire agreed

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Pascal W.@pwasbeer

1Semana

Hedged. The usd can drop to 1.40

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Patrick@Pazi3

1Semana

@pwasbeer sure. But the doller can come back in 5-10 year aswell & then it wouldnt make any diffrent or?

I invest longterm.
At any point the USD will get strong again if that would be in 5 or 20 years nobody know.

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Pope Donkey XXI@DonkeyInvestor

1Semana

I recently had a discussion about this with KI. But I would still like to hear opinions from people who are familiar with it.

My assessment: it doesn't matter in the long term. But later, when I need the money in the short term, I will almost certainly no longer shift it for tax reasons and will then be dependent on the current market situation. A weak dollar can of course also boost the profits of US companies and then lead to price rises again.

As I regularly switch the ETFs I hold to the same or a similar index anyway, I might take a hedged one next time. Then I have the choice during the withdrawal phase, depending on the market situation

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Epi@Epi

1Semana

@DonkeyInvestor 50:50 hedged-unhedged is probably the smartest allocation in the long term.
Ah, our clever donkey... 🥸

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Pope Donkey XXI@DonkeyInvestor

1Semana

@Epi But 50-50 seems a bit too much of a good thing to me. Why don't you do another backtest?

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Dividende > Zinsen@GoDividend

1Semana

@DonkeyInvestor my thought similar
Long investment horizon-> nothing to reallocate

For the short term, simply rebuild a hedged position

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Pope Donkey XXI@DonkeyInvestor

1Semana

@GoDividend but for the short term you don't invest in world or sp in the first place

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Tim@Tacticus

1Semana

@DonkeyInvestor
Would you say NOT hedging is a currency bet FOR the US dollar?

Wouldn't it be rational to be invested in the home currency?

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Pope Donkey XXI@DonkeyInvestor

1Semana

@Tacticus For me, not hedging means trusting that the USD will not depreciate excessively against the euro in the long term.

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Pope Donkey XXI@DonkeyInvestor

1Semana

@Epi if you don't believe in the total and long-term collapse of the USD, it probably only makes sense to switch the savings rate to unhedged 10-15 years before the planned withdrawal phase. Unless, of course, you are called Epi and are keen to reduce fluctuations 😁

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Epi@Epi

1Semana

@DonkeyInvestor I understood you to mean that you want to hedge against possible distortions in the payout phase. In other words, if you have 50:50 hedged-unhedged, then you can unhedge exactly the one ETF that is currently benefiting from the USD cycle.
A changeover shortly before the de-hedging phase could be expensive in tax terms. So why not make yourself independent of currency fluctuations and stay relaxed?
Relaxed donkeys are more relaxed than tense ones. 🧐

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Pope Donkey XXI@DonkeyInvestor

1Semana

@Epi because, of course, you leave a lot of returns behind and the unhedged should generally deliver the desired result. The hedged would only be for extreme market phases and can therefore be weighted lower

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Tim@Tacticus

1Semana

@DonkeyInvestor
The assumption is why one should not be invested in the home currency (euro).

Because apparently, statistically you end up with +/- 0 anyway.

Why should I accept the currency risk without any expected additional benefit?

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Ver todas las 4 respuestas adicionales

Mo@BigMo

1Semana

I am generally very critical of hedging:
The idea that the USD will continue to depreciate against the EUR, which will cost us performance, is too simplistic.
41% of the revenue in the S&P 500 comes from abroad, and thus benefits from a relative depreciation of the USD.
Furthermore, one could argue that a strong EUR is dangerous for the export-heavy EU.

You can also set up your portfolio in such a way that the maximum direct USD exposure is limited without hedging. 🤷‍♂️

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Tim@timg1355

1Semana

In the current situation, you can buy non-hedged ETFs more cheaply, or am I wrong? You get more shares for €1, so to speak. If the dollar strengthens again, the price will automatically rise with it. You just don't know if and when this will happen. But I think the difference, especially with the S&P, is pretty big this year. The hedged one is simply up 5%, while the normal one is down 7%.
If I have calculated correctly, that should be the loss of the dollar alone.

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Tigawutz@Tigawutz

1Semana

@timg1355 I would be more interested in the sentence: "If the dollar strengthens again, the price automatically rises with it". Can anyone provide more input? It should then rise disproportionately, shouldn't it? I haven't had time to look at this in previous cycles. In the case of a long-term investment, a strong dollar is best for withdrawal, and ideally new ATHs should be reached in the bull market.

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Patrick@Pazi3

1Semana

@timg1355 That's exactly what the post is about.

Your point makes sense, of course, but do you think the dollar will rise at the moment?
With a hedge you are on the safe side, not hedged it is a currency bet or am I seeing it wrong?

In the long run it should make little difference as the dollar will (probably) come back at some point.

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Julien@HappyJulienDay

1Semana

The dollar will probably continue to fall until 2027, driven by interest rate cuts from September and December. Added to this is the current policy and debt in the USA. There is only one way to stop the process and that would be if companies in the US continue to outperform and set their targets ever higher despite the tariffs. But that is unlikely. Tech is benefiting from the weak dollar, but this will also come to an end at some point.

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Jens@Helper84

1Semana

Gerd Kommer and Finanztip both say that hedging is not worthwhile if you invest for the long term.

Gerd Kommer https://share.google/bM7ZbCnJvgUryklr2
Finanztip https://g.co/kgs/YGNL6hF

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MarTheRadi@marda304

1Semana

It doesn't really matter. Hedging is not for nothing either. Last year, when the USD appreciated badly, this question strangely never came up. We benefited from that. The bottom line is that such movements don't last forever. The currency areas are not interested in the exchange rate becoming too unfavorable. Especially if you want to export

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DoesItReallyMatter@DoesItReallyMatter

1Semana

To further diversify your diversification strategy, keep an unhedged ETF as your core position, but occasionally invest in a hedged ETF as well

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