While Swiss annuities offer a guaranteed return, many investors have questions about other types of international investments. A common question is whether it is beneficial to hedge international investments. Mary Holm, personal finance expert and contributor to the New Zealand Herald, advises a hedged investment strategy. Hedging assets, she explains, helps protect investments from fluctuations in the home country’s currency.
For instance, investors in hedged international share funds are insulated from gains in the home currency, which cause the value of offshore assets to fall. Investors selecting an un-hedged fund see their investments increase or decrease in step with ongoing currency fluctuations. Thus, Holm suggests, a prudent investor should hedge at least half of his or her savings for safer long-term returns.