Currencies as International Hedge?

[success108]

What do you think about investing in currencies to get exposure to international markets? Does it provide the same diversification benefits as investing in international index funds would?

Thanks for any thoughts.

 

[brewer12345]

I'd say you are a little late to the party. I think you'd be better served by owning some international equities and non-USD denominated bonds (preferably investment grade sovereigns).

 

[success108]

Let's assume you have no other choice, the only international exposure you can get is currencies. Do you think it is possible to get international diversification from currencies?

 

[brewer12345]

I guess you will get some, but it will be a very low returning asset vs. intl stocks and bonds.

 

[twaddle]

Consider something like the CurrencyShares ETFs. For example, owning the Oz dollar would have given you cap gains of 11% and a yield of over 5% during the last year.

FXA: Basic Chart for CRRNCYSHR AUS DLR TR - Yahoo! Finance=