Question: Can you please advise an appropriate ETF to invest in mid-cap stocks?
Answer (by Paul Rickard): I am not aware of any ETF that specifically covers mid-cap stocks.
I think that if you look at iShares IOZ (which covers the ASX 200) or Vanguard’s VAS (which covers the ASX 300), you can pick this area of the market up.
Some of the listed investment companies, such as Geoff Wilson’s WAM, tend to hone in on this area – but I would be very wary about paying a premium to invest in some of the better performing LICs.
Question: I’m looking at investing in some global infrastructure funds but I am uncertain about whether to go with hedged or unhedged funds at this time. Could you explain the impact of both, with changes in the AUD versus the USD in particular, please?
Answer (by Paul Rickard): It really comes down to your medium term view on the AUD.
If you think it is going to weaken (i.e., head below 70 US cents down towards 60 US cents), go unhedged.
If you think the AUD may strengthen, or for that matter, hang around this level for some time, go hedged.
My take – while I think the AUD may yet test 70c, this sort of level of around 70 to 75 cents looks to me close to fair value – so I would be inclined to be hedged.
You probably have more fund choice with unhedged funds – and sometime, the Manager will also manage the currency risk.
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