Do funds hedge currency exposure by default?

michaels

So my main vehicle is a fidelity world tracker, obviously chosen for maximum diversification at low cost.  Now I am wondering if it self hedges for gains/losses relating to currency movements or will the latest fall in the pound not benefit my GBP position because it has built in hedging?

So the question covers not only this fund specifically but more generally any other funds, for example what about gold index tracker, etc etc

Prism

Few funds hedge currency as it costs more to do. You can find examples though if you dig a little deeper. Vanguard hedge most of their global bond funds to reduce currency volatility 

Key Investor Information (vanguard.com)

squirrelpie

michaels said:

So the question covers not only this fund specifically but more generally any other funds, for example what about gold index tracker, etc etc

Some do, some don't, so you will need to look at the information about each fund. As a clue, those that do often have the word 'hedged' in their name.

Albermarle

squirrelpie said:

michaels said:

So the question covers not only this fund specifically but more generally any other funds, for example what about gold index tracker, etc etc

Some do, some don't, so you will need to look at the information about each fund. As a clue, those that do often have the word 'hedged' in their name.

Plus they will have a higher OCF, to cover the extra cost.

[Deleted User]

I don’t know of any equity world trackers that do this; not to say there aren’t any. Country specific funds are usually available as a hedged version.  

Not only does hedging shares incur extra costs and hurt long term performance, it also reduces diversification. Counterintuitively, including world stocks in their native currency actually reduces volatility. 

The way I think of it is that we own actual profit-making assets.  Hedging would be an active currency bet and a distortion.