ROB CARRICK ON CURRENCY HEDGING

Rob Carrick from the Globe and Mail wrote a column this weekend outlining 3 scenarios for the Canadian dollar. More interestingly, he constructed four sample portfolios to deal with these scenarios:

1. Canadian dollar will appreciate: use (currency) hedged funds to protect against a higher loonie.
2. Canadian dollar will depreciate: use non-hedged global equity funds. Carrick still recommends that 20% of this portfolio be allocated to hedged funds.
3. Canadian dollar will stabilize at current levels: use hedged and non-hedged funds.
4. Keep it Simple: use a 50/50 approach between hedged/non-hedged funds and ETFs.

Note from below that his appreciation example still allocates 10% to a non-hedged fund. I point this out because the foreign portion of my RRSP portfolio is fully hedged to currency movements. I should probably revisit this.