Hoping someone can help me understand the specific forex ramifications for Blackrock's ETFs designed to mirror foreign indexes (e.g. IEU to Europe 350, IAA to Asia 50). From the prospectus:
The Funds trade on ASX and will be executed in A$ whereas NAV is determined in US$. Also, dividends or distributions will be determined in US$ and then converted into A$ prior to payment to Australian investors in the Funds (refer to section 2.7 of this Prospectus for further details).
Taking away from the dividends component, would one not also have to consider the currency of the equities held themselves? For example, EUR, GBP, CNY, etc.
After Brexit, IEU took a huge hit. Notwithstanding the impact of shares being smashed at that point in time, the index doesn't appear to have retraced to anywhere near its pre-brexit high despite European shares being at near-record levels. Is this indicative of the european currencies also being a factor?
