I watched the recent webinar by Sam and he mentioned about FX hedging being an advantage of the DFA World Equity Fund in SGD. Can I have an example of how this plays out?

Hi,

We dont mean FX hedging for equities, but for bonds. It means that investors do not have to incur any FX transaction costs, as well as cross the FX bid-ask spread when they invest through us. As you can imagine, making an expensive FX transaction when you buy/sell a foreign currency denominated fund is somewhat like a sales/withdrawal charge respectively.

If you are able to transact in a cost efficient manner for FX through a low cost discount brokerage, and are happy to hold on that position over longer periods of time, then the impact to returns will be marginally poorer. Else buying into low cost sgd funds is great!

To clarify Sam was referring more about to the PIMCO bond funds, he didnt elaborate fully during the presentation. So to be fully clear, for the Dimensional Funds you have FX exposure, just that you dont have to do FX transaction/ bid-ask spread. Hope this helps!​​​