Currency swing: hedged or not

Currency swing: hedged or not

When Canadians buy US stocks, they also buy the US dollar. Hedged products, like hedged ETFs and Canadian Depositary Receipts (CDRs), which are hedged by design, try to remove that currency swing. Unhedged products ride it. Hedging costs a little and cuts both ways: it protects when the loonie rises, and it gives up the gain when the loonie falls.

Try the currency swing

Example rate: 1 USD = 1.40 CAD. An example rate, not a quote. The hedged line stays flat on purpose: removing the currency swing is the whole point of the hedge, before its small cost.