Jose Garcia Zarate: Sterling has taken a bit of a battering over the past month. First in the immediate aftermath of the EU referendum, and more recently, though clearly linked to that event, because of the cut in interest rates by the Bank of England.
Most of us will have some exposure to international equity or fixed income markets in our investment portfolios. Some may also have exposure commodities, which in most cases are denominated in us dollars. And so, the issue of whether to hedge against any further downside to sterling has become a hot topic of discussion.
Forecasting how the exchange rate will evolve in the mid-to-long-term is notoriously difficult, but if you feel that getting some kind of protection is the right thing for you, at least for the short-to-mid-term, then you may want to consider the growing array of exchange-traded-funds that come with in-built hedges to shield the returns against the volatility of sterling’s exchange rate. These cover international equity and fixed income as well as commodity exposures and can be easily incorporated in a portfolio on a tactical basis.
This is just another example of how the ETF industry is currently at the forefront of product innovation, offering investors flexible choice to suit individual preferences.
