Credit Suisse Asset Management(CSAM) has launched a first in the Australian investment market place — an international shares fund allowing investors to choose a preferred level of hedging within a tax effective structure.
Currency hedging options within the fund – called the Flexible International Share Fund – range from fully hedged to unhedged, with two actively hedged options managed by the CSAM in between.
Head of distribution Brian Thomas says one of the unique aspects of the fund is its tax effective structure and ATO product ruling, which allows investors to move between the four hedging capabilities at any time without triggering capital gains tax – a first in Australia.
Thomas says the fund is a response to the recent volatility in the value of the Aussie dollar, which has “highlighted to investors the importance of determining the right currency strategy”.
“In these times of low returns from traditional asset classes, the impact of currency fluctuations on investment returns is a key issue for funds,” Thomas says.
Thomas says the current average allocation of around 26 per cent to international shares in portfolios, even in a period of scepticism, is a marker for the future importance of the asset class.
Thomas says in the coming decades, investors are going to have to start looking offshore for good commodities producers, while for retail investors currency is “a very important thing that does have to be managed”.
Thomas’ belief is that with international shares, the sector has become more important than the country, while the trend going forward will see investors manage hedging and currency separately to assets.
“Maybe a time will come when a breakdown will occur where you don’t question where shares are from, just how good they are.”
Consistent with this philosophy, the fund will allow investors to separate decisions about whether to invest in international equities from decisions about currency exposure.
Credit Suisse Asset Management is currently theMoney Management/AssirtInternational Fund Manager of the Year.
