EP 75: Currency hedging, the AUD and managing USD exposure – Rochford Capital

When over 50% of a portfolio's offshore assets are USD-denominated, currency risk isn't just a theoretical issue—it can be a real drag on performance. In episode 75 of the Portfolio Construction Podcast Series, Paul O'Connor (Netwealth Head of Investment Management & Research) speaks with Tom Averill, Managing Director of Rochford Capital, about how investors can more effectively manage USD exposure—especially with the AUD near the low end of its long-term range. They discuss why traditional hedging tools often fall short, how the Rochford Leveraged Long AUD Fund provides targeted FX exposure through OTC derivatives, and why this can be a more accurate, scalable, and tax-efficient solution than switching between hedged and unhedged funds. Also covered: the macroeconomic outlook for the Australian dollar, implications of the US credit downgrade, the growing structural role of China, and how geopolitical shifts are reshaping global currency dynamics.   To learn more about today's guest and Netwealth, visit: 👉 Super Accelerator (for super): https://www.netwealth.com.au/web/personal/super-and-smsf/super-accelerator-plus/?utm_source=pc 👉 Wealth Accelerator (for investment accounts): https://www.netwealth.com.au/web/personal/investment-solutions/wealth-accelerator/?utm_source=pc 👉 Compare Funds & Models tool to view investments: https://www.netwealth.com.au/nw/Fund/CompareFundsAndModels?utm_source=pc   Timestamps:  00:00 – Intro & context: AUD volatility, USD exposure, and the case for smarter hedging 01:45 – Meet Tom Averill: Background in FX, macro strategy, and launching Rochford Capital 05:10 – Institutional hedging explained: Why hedging behaviour differs across asset classes 08:00 – Is the AUD undervalued?: Long-term range, fair value metrics, and capital flows 11:40 – US downgrade & structural debt risk: What rising deficits mean for USD confidence 15:30 – Global dynamics: China's slowdown, US retrenchment, and implications for AUD 18:25 – The Rochford fund mechanics: 3x leveraged AUD exposure via OTC derivatives—not futures 23:05 – Precision and efficiency: Why the fund helps avoid CGT events and hedging inefficiencies 26:50 – Cash management & execution: Managing liquidity, carry, and cost through institutional relationships 30:40 – Portfolio applications: How direct investors and advisers are using the fund for targeted hedging 35:10 – AUD/USD outlook: Interest rate differentials and the case for longer-term AUD strength 38:15 – Key takeaways: Where the fund fits in portfolio construction and risk management   Disclaimer: Netwealth Superannuation Services Pty Ltd issues Netwealth Super Accelerator. Netwealth Investments Limited issues the Netwealth Wealth Accelerator Multi-Asset Portfolio Service. Information contained within this podcast is of general nature only. Consider whether the products are appropriate for you and seek advice where required. To help you decide, read the PDS or IDPS Guide and TMD available at https://www.netwealth.com.au/