many people are surprised to save or invest in dollars or euros. Many times they want to do direct foreign bills, but the downside is that your money can lose value over time, as it is not generating income.
Among the many options that exist in mutual funds are those investing in foreign currencies such as dollars or euros, which are also known as “coverage” that can be better alternative to paper money.
The name of the category responds to the function of these funds: to protect the investor’s wealth of possible depreciation of local currency. For this may be one alternative to consider when looking to form a well-diversified investment portfolio.
As these funds are for protection, if we spend in pesos should be considered to have only a small portion in foreign currencies.
In a strict sense, the funds “hedge” refers only to those who devote their checkbooks investments denominated in dollars, euros or other currency other than Mexican pesos, but other options are to invest in foreign currencies are debt instruments governments or foreign companies or shares in foreign companies.
How do they work?
Because that Mexico’s Monetary Law states that the legal tender currency in the country is the Mexican peso to invest money in pesos is received, it switches to the relevant currency with the exchange rate prevailing at the time of the purchasing and investing in the fund chosen.
When the customer wants to withdraw, also taken at the exchange rate in pesos for the time when the investment is liquidated.
If an investor wants to get funds in other currencies is important to watch the historical behavior of these coins, to see if you • Expensive • O • • And if cheap is a good time to buy, because in the case of funds that invest in checkbooks if the weight goes up against the dollar, the investor loses.
In the other funds mentioned-such as investing in debt or equity-come into play besides the peso with other currencies, there are other factors as the performance of companies that are investing or situation country’s tax that is sovereign, for example.