Investment strategies – buying into US high yields but hedging against USD depreciation

One of the problems with my previous investment strategy was that I was investing local currency (SGD/BND) into US dollar denominated investments. Not normally a bad idea, but when the USD has been sliding south, the capital appreciation in my investments was being hit by the forex depreciation. Not ideal.

Part of my research into countering this is to look into ways to reduce my currency risk, while still maximising the power of earning in SGD but investing in other global currencies. One particular product caught my eye, and I wanted to blog about this product by Allianz Global Investors (Allianz GI).

Their “US High yield SGD Hedged” fund is launching next month with some pretty attractive targets – annualised yield of 7.2% a unit, but hedged against further depreciation of the USD. This fund will allow investors to get in on high-yielding US “junk” bonds.

The prospectus and further information is available on Fund Supermart.

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