---
title: "How Hedged and Unhedged ETFs Differ"
language: "en"
canonical: "https://kred.dev/en/overseas-etf-inav/guide/fx-hedge"
cluster: "etf"
updated: "2026-09-08"
parent: "https://kred.dev/en/overseas-etf-inav"
---

# How Hedged and Unhedged ETFs Differ

Two overseas ETFs following the same index move apart overnight when one is hedged and the other is not, because the exchange rate enters the iNAV in different ways.

## How does an unhedged fund move?

In an unhedged fund the change in the won exchange rate is laid straight on top of the change in United States share prices. Even with United States shares flat, a weaker won lifts the worth measured in won and a stronger won brings it down. In the iNAV the ratio of the rate now to the rate on the anchor date is multiplied into every United States holding.

## What is different about a hedged fund?

A hedged fund is built to offset moves in the exchange rate, so that only the change in United States share prices reaches its worth. In the iNAV the exchange rate term is dropped and only the price ratio of the United States holdings is used. The method shown on the screen says whether a fund is hedged or unhedged.

## How do the two part ways overnight?

On a night when the United States market rose and the won weakened, the unhedged fund's iNAV rises further, and on a night when the United States market rose but the won strengthened, the hedged fund comes out looking better. Setting the two side by side shows how much work the exchange rate did that day.

## What should not be read into this?

The hedged treatment in the iNAV is the plain step of dropping the exchange rate term, and it does not carry the hedging costs or the differences in hedge ratio that a real fund has. Which side comes out ahead depends on where the exchange rate goes, and that is not something this screen answers.

## Frequently Asked Questions

### Does a hedged ETF hold its value when the exchange rate moves?

In the iNAV on this screen the exchange rate term is dropped, so only the change in United States share prices is reflected. A real fund can still carry a little exchange rate effect through its hedging costs and its hedge ratio.

### Which is better, hedged or unhedged?

It depends on where the exchange rate goes and this screen does not answer it. When the won is weakening the unhedged version holds its worth better, and when the won is strengthening the hedged version does.

## Overseas ETF iNAV Guide

- [What an ETF iNAV Is](https://kred.dev/en/overseas-etf-inav/guide/what-is-inav.md)
- [Reading an ETF Premium or Discount](https://kred.dev/en/overseas-etf-inav/guide/premium-discount.md)
- [See all guides](https://kred.dev/en/overseas-etf-inav/guide.md)
- [Back to overseas ETF real-time iNAV](https://kred.dev/en/overseas-etf-inav)