The alternatives sector is unique in that it’s largely defined by what it’s not. Accordingly, how you fit alternatives within your existing asset class structure will depend on relativity, and how the investments interact with the other asset classes according to Atchison’s Kev Toohey.
The private markets juggernaut is one that has also thrown up a wealth of data that other players can use to sharpen up due diligence when making their own investment decisions – especially in the growing secondaries market.
Gold as currency hedging
Investors considering gold sometimes wonder about currency hedging. As gold trades in US dollars, Australians who buy it make a twofold bet:
- That the gold price will rise.
- That the US dollar will rise or stay broadly the same vis-Ã -vis the Aussie dollar.
While the first of these bets is self-evident, the second can give investors cause for pause. Investors might ask: can exchange rate movements undermine gold’s role in my portfolio? When the US dollar is at record highs or lows, am I better off in hedged or unhedged gold? What are the strengths and weaknesses of each approach?
This white paper answers these questions. In doing so, the white paper lays out the three main ways gold gets used: diversification, crisis hedging, and tactical trading. We then examine the effects of currency hedging on each.
