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You are concerned about upcoming weakness in the Canadian dollar. Which type of fund should you invest in?
Suggested Answer: D
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A global fund that does not hedge foreign currency risk benefits from a weakening Canadian dollar, as the value of foreign investments increases in Canadian dollar terms. The feedback from the document states:
'Global mutual funds are attractive in that they can provide a hedge against a decline in the relative value of the Canadian dollar... It is important for mutual fund sales representatives to know whether their global mutual funds hedge foreign exchange risk, because some clients will want to bear that risk themselves, while others will not.'
12 comments · newest first
KR
Kristin
3 days ago
A specialty fund with derivatives sounds risky to me.
FR
Frederica
8 days ago
I think C is better since it covers more ground globally.
SO
Sol
13 days ago
B is a solid choice for currency protection.
ST
Stevie
18 days ago
Not sure if hedging is worth it right now.
LI
Lindy
23 days ago
Wait, why would anyone choose D? That sounds risky!
CE
Ceola
28 days ago
A specialty fund could be risky, though.
ME
Merri
1 month ago
I think C might be better for broader exposure.
CH
Cherrie
1 month ago
B is a solid choice for currency protection.
WE
Werner
1 month ago
I’m confused about the difference between international and global funds. Does one hedge better than the other?
EF
Effie
2 months ago
I practiced a question similar to this, and I think hedging is key, so I’d lean towards B or C as well.
QU
Quentin
2 months ago
I'm not entirely sure, but I feel like specialty funds are more about specific sectors rather than currency risk.
HE
Herschel
2 months ago
I think I remember that hedging is important when you're worried about currency weakness, so maybe options B or C?