Currency-Hedged Investing: Unhedged vs Hedged Returns, Forward Points, Hedge Costs, Partial Hedge Ratios & Rolling Hedges
See what currency moves do to a foreign investment. You will split returns into local and currency parts, estimate the cost of hedging from interest-rate differences, compare hedged and unhedged results, test partial hedge ratios, roll monthly forwards with their cash settlements and compare the risk of bonds and shares with and without a hedge, with every cell checked as you go.
One-time payment · lifetime access · lessons, labs, exam and certificate included · no subscription.
About this course
This course shows in a spreadsheet what currency moves do to a foreign investment, using a fictional investment club. You split one-year results into local return, currency return and the cross term. You price forwards from spot and two interest rates, turn them into forward points and the annual hedge carry, and compare hedged and unhedged results, first with the quick rule and then with a hedge on the start value. You build a hedge-ratio table from 0 % to 100 %, roll twelve monthly forwards with their cash settlements, measure volatility with STDEV.S, summarise net currency exposure with SUMIFS and finish with a scenario dashboard and chart.
Lessons
- Returns in Two Currencies: Local Return, Currency Return & the Cross Term Pro
- Forward Rates & Forward Points: What a Hedge Costs or Earns Pro
- Hedged vs Unhedged: Local Return Plus the Hedge Carry Pro
- Partial Hedges: Returns at 0 %, 25 %, 50 %, 75 % and 100 % Hedged Pro
- Rolling Forwards: Monthly Rolls, Settlements & the Cash a Hedge Needs Pro
- Volatility: How Much Risk Does a Hedge Remove from Bonds and Shares? Pro
- The Portfolio View: Currency Exposure, Hedged Amounts & Net Exposure Pro
- Scenario Dashboard: Strong or Weak Home Currency, Rate Changes & the Hedge Decision Pro