Purchasing global / emerging market ETFs in AUD doesn't expose you to AUD, It is a common misconception that the currency in which an ETF is trading has any effect on its eventual returns (other than currency exchange fees which are so cheap on IBKR that they can safely be ignored). What matters is the currencies to which the underlying holdings of the ETF are exposed. If you wanted to increase your AUD exposure, you would purchase ETFs tracking Australian companies which have a significant part of their revenues in Australia. More on this below (when reading this, mind that in Europe, a given ETF can be traded in different currencies on different exchanges):
I bought the AUD ages ago when the AUD/USD exchange rate was around 0.8, currently its sitting at 0.64, I'd rather not commit the loss. Beside since there is a possbility that I might return to Australia some day, I don't mind having some AUD exposure, instead of 100% USD/HKD exposure.
I will have both the LSE and ASX holdings on IBKR, so I guess managing both shouldn't be too bad.
In which currency should I purchase my ETFs?
Short answer: the currency in which a given ETF is being traded on a particular exchange doesn't affect its return (other than the cost of exchanging currencies, which is minimal on a platform like IBKR which has second to none exchange rates).
Why? Because you are still purchasing the exact same underlying assets. Only in one case you pay for them in USD and in the other you pay for them in GBP or EUR. And you receive the same value when you sell the assets, no matter whether the payment currency is USD or GBP or EUR.
It's just like buying a house or a car. It doesn't matter if you pay for it in USD or GBP, it's still the same house / car. And you will still get the same amount of money for it later when you sell it, whether the buyer pays you in USD or GBP or EUR or JPY or BTC.
What matters for the returns is the currency exposure of the companies held by the ETF.
Hedging currency also matters for the returns in the case of currency-hedged ETFs.
Long answer: (and yes, all of that is worth reading for an in-depth understanding - Knowledge is Power):
https://www.bankeronwheels.com/in-which ... -buy-etfs/
https://www.justetf.com/en/news/etf/the ... -etfs.html
https://www.bogleheads.org/wiki/Non-US_ ... currencies
https://www.bogleheads.org/wiki/Currenc ... _investors
Statistics: Posted by daviddem — Wed Apr 17, 2024 1:53 am — Replies 5 — Views 390