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With the Rand getting all hot and bothered again after a protracted run stronger I thought a quick look at how we can hedge against a weaker currency.
The easiest and simplest is a position in NEWUSD while the purest would be an offshore webtrader account with currency futures offering some gearing.
Perhaps most importantly, never panic.
And currency futures.
ah yes, added them.
It is just that the Rand is so volatile!! It is hard to trade it at a profit with currency features. I am scared of it.
Been buying Atlantic Leaf Properties today which owns UK Properties. At R15.70 and on about 10% yield would think downside fairly limited and good hedge if things go pear shaped with rand.
Lots of rumours re cabinet reshuffling. Thanks for this, might consider the direct currency route.
What about putting Rand into an offshore unit trust that is domiciled offshore and is denominated in USD?
There are others, but for instance Coronation Managed Global which is based in Ireland and the units are held in USD.
Costs are 1.8% pa.
Yip that works, question is if they will out perform a locally listed but offshore ETF? Check fees (1.8% as you said, any performace fees?), benchmark, asset allocation and past performance. My preference is always ETFs and one could buy a NYSE ETF, VOO being the SP500 tracker but there over a thousand others.
Thanks for the answer, Simon. What would be the most cost effective way in buying such an ETF (lowest costs)? Webtrader seems pricey, (or perhaps I just don't understand all the jargon in their ad).
Webtrader is US$20 min per trade and 0.2% of portfolio value per year as admin fee.
You could of course just buy CSP500 in a JSE (or veen tax-free) account at normal brokerage rates.
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