Hi,
I’m looking at investing in an ETF following the FTSE 100 and have come across the iShares Core FTSE 100 UCITS ETF hedged acc fund
It says the share class is hedged, which i take it to mean it negates the currency fluctuations in non UK funds.
My question please as a newbie is does that mean it is really a CFD fund due to the hedging element?
I’ve read on these forums that CFDs for a newbie are to be avoided really.
Thanks
JJ
Hi
Do you have the ISIN or ticker handy by any chance and I’ll see if I can take a look for you?
I’m getting 3 results and want to be sure I’m lookig at the right one
No it’s just an ETF hedged to a different currency.
It has nothing to do with CFDs.
Hi,
the ISIN is IE00BYZ28W67. Thanks for looking for me
JJ
Lovely, I found it. So here is what I found out about the ETF.
"The Share Class, via the Fund is passively managed and aims to invest so far as possible and practicable in the equity securities (e.g. shares) that make up the Index, combined with foreign currency contracts for currency hedging.
The Fund may also engage in short-term secured lending of its investments to certain eligible third parties to generate additional income to off-set the costs of the Fund.
Your shares will be “hedged” with the aim of reducing the effect of exchange rate fluctuations between their denominated currency and the Fund’s underlying portfolio currencies. The hedging strategy may not completely eliminate currency risk and, therefore, may affect the performance of your shares"
So basically because your purchases of units of the Fund will be made in a single currency but the shares owned by the Fund are traded in multiple foreign base currencies such as GBP & USD, in order that FX fluctuations don’t negatively impact upon your position too much, the Fund also trades FX contracts as a way of offsetting this risk (they do this using less than 2% of your capital).
The answer to your question is no, this is not a CFD fund. The fact it is “hedged” should be a positive factor for you and not a cause for concern.