Mike Reynolds
Mike Reynolds

Director / Adviser

Melbourne

Talk to us about AUD today

How is a sporting season like the Australian dollar?

The end of September marked the end of yet another AFL premiership season (well done, Hawks!) and the NRL Grand Final between the South Sydney Rabbitohs vs.Canterbury-Bankstown Bulldogs now only a few sleeps away. 

For the Australian dollar, the end of September – continuing into October – marked a month of fluctuations. So how are the ups and downs of a sporting season similar to the ups and downs of the Australian dollar (AUD)?  

Sporting odds

The odds of your team winning can be broken down into many variables. Past performance against the opposition; recent winning streak; playing ground preference; home crowd support and key player ins and outs can all have an influence on the final score board.

Currency movement also has various influencers that play a role in the relative value of our currency. For example, yesterday saw the AUD drop to an almost four-year low of US86.97c, on the back of low retail sales data, which reported figures 0.3 per cent less than economists expected. Then, at 7am this morning, the local dollar bounced back and was trading at US87.33c, up 0.36c.

Some of the influencers of the Australian dollar include:

Monetary policy

If interest rates are higher in Australia than elsewhere this tends to drive the AUD up

The US Dollar

As the USD strengthens the AUD tends to decline

Investor sentiment

When risk appetite in high, the AUD tends higher

Key player selection

Just as any good coach can adjust their game strategy to rise up against tough competitors, investment managers can also position their portfolios to weather currency storms.

FMD Adviser and Investment Committee member, Mike Reynolds, comments that “in 2013 the AUD was high against the USD and FMD Investment Committee strategically positioned our international investments to be unhedged.  What we have seen recently is that the likelihood of interest rate rises in the US has increased, so the AUD has fallen and as a result our client’s international investments have produced some very good returns for the month of September”.

“Some examples of this include the Magellan Global Fund which is up 5 per cent for the month of September, the Walter Scott Global Equity Fund up 4.2 per cent and Aberdeen International Equity Fund International Fund up 3 per cent. These returns are all very much currency related”.

Consider who’s supporting your team behind the scenes

Behind every great team is a great game strategy, and investing for your future is no different.

We believe regular review meetings are critical to help you grow and secure your wealth through sound, long-term investment strategies - but we’re not content to stop there. We know investors want greater transparency in their portfolio and the opportunity to immediately benefit from the decisions made by our Investment Committee (IC). That's why we created Active Management Service (AMS), our industry leading investment portfolio service; specifically designed to meet the investment objectives of our clients. The IC meets regularly to discuss our shares portfolios and make recommendations to retain, replace or add  to your portfolio.

To discover how sound financial advice could enhance your game plan, book in for a Free Financial Health Check with an FMD adviser today.

Digital Image Source: theage.com.au


General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977.