Overweight property? How to hedge your property exposure with ASX shares

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Many share market investors will be far more leveraged to the Australian property market than the equity market, after all most people will have large amounts of equity in their home and others will have large amounts of equity in investment properties.

Some then will be interested to know whether there are any simple ASX investment strategies that can help hedge your exposure to a softening in the property markets of Sydney or Melbourne for example.

I believe one sensible policy for people overweight the property market is to look to own ASX equities with significant exposure to a stronger US dollar.


The RBA implicitly stated yesterday that: “Under present circumstances, an appreciating exchange rate could complicate the adjustment underway in the economy“.

In other words, Australian cash rates aren’t heading lower to fire up the property market again, unless, the Australian dollar heads higher.

Investors with heavy exposure to the property market then should look to position their share portfolio to benefit from a lower Australian dollar, as a lower currency drastically reduces the chances of a cash rate cut and further strength in the property market.

In that way even if the property market is softening as the cash rate cutting cycle ends, a smart investor’s share portfolio should benefit thanks to the lower Aussie dollar.

Top quality shares to benefit from a lower dollar that investors overweight property could consider include Amcor Limited (ASX: AMC), Cochlear Limited (ASX: COH), CSL Limited (ASX: CSL), Domino’s Pizza Enterprises Ltd. (ASX: DMP) or ResMed Inc. (CHESS) (ASX: RMD).

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Motley Fool contributor Tom Richardson owns shares of ResMed Inc..

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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