Currency solutions

What is currency risk?

A mutual fund that buys and sells securities denominated in currencies other than the Canadian dollar may experience a gain or a loss depending on changes in the exchange rate between the foreign currency and the Canadian dollar. This is known as “currency risk.” *

* Sometimes this is also referred to as “exchange rate risk.”

Why does it matter?

Currency risk can have a positive or a negative effect on portfolio returns. For example, a Canadian investor with unhedged foreign currency exposure can benefit from a depreciating Canadian dollar. On the other hand, the same investor’s portfolio will be affected negatively by an appreciating Canadian dollar.

It should be noted while hedging may mitigate currency risk, it may not necessarily reduce total portfolio risk.

Three reasons to protect against currency risk

1)    The Canadian dollar has a long-term history of volatility against the U.S. dollar.

2)    Currency volatility can have a significant impact on short-term portfolio returns.

3)    Deciding when and how much to hedge currency can be difficult.

 

Fidelity Systematic Currency Hedging

Designed for investors who are seeking to mitigate currency volatility while having the potential to capitalize on expected changes in the USD-CAD exchange rate, Fidelity Systematic Currency Hedging uses a rules-based, quantitative model to determine the optimal hedge ratio for a fund.

 

Fidelity currency neutral solutions

Protecting portfolios against adverse currency movements is an important part of investing. Currency neutral funds can help mitigate the impact of changes in exchange rates for investors interested in accessing foreign markets.

 

U.S. dollar purchase option

Canadian investors can use their U.S. dollars to invest in a wide variety of Fidelity mutual funds. U.S. dollar funds may be suitable for investors who already have U.S. dollars and want to maintain their investment returns in U.S. dollars, or investors who may be saving for goals that involve U.S. dollars, for example, those who are planning to spend time in the U.S. during their retirement.



Fidelity currency neutral funds use derivatives to mitigate the funds’ exposure to changes in exchange rates between the U.S. dollar and the Canadian dollar. The investment approach used by the funds, while effective in reducing exchange rate risk, will not completely eliminate the impact of currency fluctuations. The funds' returns will differ from the local currency returns of their underlying funds.

Fidelity systematic currency hedged funds use derivatives to mitigate the funds’ exposure to changes in exchange rates between the U.S. dollar and the Canadian dollar. The systematic currency hedged strategy, a quantitative model, used by the funds, while aiming to apply an optimal exposure to the USD at a point in time, there's no assurance that the strategy will be effective. The funds’ returns will differ from the local currency returns of its underlying funds. Fidelity Systematic Currency Hedged funds may also have exposure to other foreign currencies (such as the euro or the yen), which are not hedged. The funds’ exposure to other foreign currencies may change at any time and the Funds may choose to hedge these exposures in the future.

Read a fund’s or pool’s prospectus or offering memorandum and speak to an advisor before investing. Read our privacy policy. By using or logging in to this website, you consent to the use of cookies as described in our privacy policy.

This site is for persons in Canada only. Mutual funds and ETFs sponsored by Fidelity Investments Canada ULC are only qualified for sale in the provinces and territories of Canada.

Read a fund’s or pool’s prospectus or offering memorandum and speak to an advisor before investing. Read our privacy policy. By using or logging in to this website, you consent to the use of cookies as described in our privacy policy.

This site is for persons in Canada only. Mutual funds and ETFs sponsored by Fidelity Investments Canada ULC are only qualified for sale in the provinces and territories of Canada.

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