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NYSE/Liffe 10 Year US Treasury Note Future June14 Weight: -7.87
MAINX. Teresa Kong responded to David, who asked the question on my behalf, a couple of months ago, maybe. This item is new since then. Can someone break it down in layman's terms, please? This is the largest item in the MAINX portfolio. What is the wisdom of this? Is there a "method to the madness?"
If I understood Ms. Kong's answer correctly, perhaps don't think of it as shorting, but hedging. They're trying to take currency risk out of the equation.
Here is a Tweedy Browne paper on hedging foreign equity holdings, this is a Vanguard video on how hedging works, and this is a Vanguard paper on why you might want to hedge currency risk in an income fund.
Well, thank you all, a lot. She's shorting-hedging the dollar because it's going to drop in value. Or maybe not. It's all about reducing volatility. OK. The Vanguard video was very helpful! ....But this might explain why the fund is not keeping up with its peers? Morningstar is often unhelpful, it's true. But M* shows MAINX with VERY different performance numbers since just the last few days. (Much better.) Are they using a different peer group now, or different criteria? Who knows. It's not the best source of information, is it??? Anyhow, I'm sticking with MAINX. My stake has done well in that fund. And it's still very young. Inception was 30 Nov, 2011. Still not a lot of AUM. $55M. Thanks again for the responses.
Mainx over last 30 days , 2 cents diff. Yes there was a dip & recovery but adjusted close for 30 days + 2 pennies . What are you see Crash? Just the market at work, here.
Comments
Here is a Tweedy Browne paper on hedging foreign equity holdings, this is a Vanguard video on how hedging works, and this is a Vanguard paper on why you might want to hedge currency risk in an income fund.
David
Good week to all, Derf