Hi guys,
Are there any other investments (shares, funds or otherwise) that will profit from a falling AUD?
David.
Good question here's what I'm doing. Like HandyAndy I've invested in US property. Some (not all) is financed by AUD so i'm effectively short AUD and like most people taking a view that Aussie dollar is going down.
Here's what I"m doing to minimize my transaction costs. I'm based in Hong Kong so I'm moving money between Sydney, Hong Kong and USA and if you do it a lot you need to be careful as the costs add up.
The cheapest / fastest way I've found is to open up a HSBC and Citigroup account (I have both). in all 3 cities and use the global transfer feature. There are no fees and the rates are very competitive if you call them up and complain. On average I pay about a spread of 0.3% on FX transactions.
The other option if you don't want the hassle is to use ozforex.com I used to use these guys their spread is about 0.7% if you haggle with them I've gotten it down to 0.5%. It's still a fair bit of money if you say move $100k USD it's $500 USD in fees.
DO NOT use a bank to transfer they will rip you off on the rate and the fees.
The biggest question is if AUD suddenly has a sharp drop to 60 cents say like it did in GFC 2008/2009 and you want to lock in this gain without selling your USA property how do you do it?
I'm using a fx trading account to do this whenever I see a good rate. So if AUD goes to to say 60 cents and I want to hedge $200k, I would buy $200k AUD at that level.
The rates are very competitive as it's insitutional rates the cost is about 0.001%.
You have effectively locked in the rate. You would sell your AUD trade in your brokerage account in say 10 years when you actually sell your USA property. so let's at that point AUD is at 80 cents.
You convert your $200k USD you got from your USA sale back into AUD at 80 cents. And you sell your AUD long trade that you got at 60 cents which will be in profit.
Great move in AUD today -1.15% off the employment numbers.
