The Allianz Dynamic Multi Asset Strategy SRI 75 IT (H2-USD) and its EUR sibling (IT2) are the same strategy, same manager, same $5.5bn pool of capital — separated by a single letter and one basis point in annual fees. But the currency-hedged USD wrapper does something the “75” label doesn’t advertise: it adds a layer of risk that the fund’s own branding quietly obscures.
What the H2-USD label actually means
Start with the basics. The “75” in the fund name refers to the proportion of the portfolio allocated to growth assets — equities, higher-risk bonds, alternatives — as opposed to more defensive holdings. It’s a risk budget, not a return target. The remaining 25% sits in lower-volatility assets designed to cushion drawdowns (how far the fund can fall) in bad markets.
The “H2” designation means the share class is currency-hedged back to US dollars. The underly ing portfolio is constructed in euros — that’s the base currency. Every night, the fund’s administrator runs a rolling series of short-dated currency swaps to convert that EUR exposure into USD. The goal is straightforward: a USD-based investor shouldn’t see their returns eaten by swings in the EUR/USD rate.
So far, so sensible. But hedging isn’t free, and it isn’t neutral.
The annual fee (OCF) on the H2-USD class is 0.88%. The EUR class charges 0.89%. That one-basis-point difference is, for practical purposes, noise — it won’t show up in any meaningful return comparison. Both are institutional classes, meaning you won’t find either on a standard retail platform. The minimum investment thresholds sit far above what a private investor would normally commit to a single fund. Worth stating plainly: if you’re reading this on a platform like Hargreaves Lansdown or AJ Bell, neither class is accessible to you directly.
Why the hedging changes the risk picture
Here’s where the “75” label starts to mislead. The risk budget describes the underly ing portfolio — but hedging introduces a separate source of return and volatility that sits on top of it.
Currency hedging between euros and dollars costs money when US interest rates are higher than eurozone rates. That’s because to hedge EUR/USD, you’re effectively borrowing dollars and lending euros through the swap market — and if dollar rates are materially above euro rates, you pay that difference as a running cost. This doesn’t show up in the OCF. It appears in performance, quietly, as a drag (or, in periods when eurozone rates exceed US rates, as a small tailwind).
The practical effect: two investors in the same underly ing fund, one in the EUR class and one in the H2-USD class, will see different returns in any given month — not because the portfolio did anything different, but because of the hedge’s carry cost and the precision of the daily roll. In a year where the EUR/USD rate moves 5% or more, that gap can be meaningful even before accounting for roll costs.
There’s also basis risk to consider. Currency hedges are imperfect. A fund of this complexity — multi-asset, multi-region, with holdings likely denominated in sterling, yen, and Asian currencies as well as EUR and USD — doesn’t have a single clean currency exposure to hedge. The H2-USD wrapper is hedging the fund’s net EUR exposure to USD, not every underly ing currency in the portfolio. A private investor checking the share class currency and assuming they’ve neutralised all FX risk would be wrong.
The “75” tells you how the fund invests. The “H2-USD” tells you how it’s priced — and those are different conversations.
What to watch next
Three signals are worth monitoring for anyone tracking this fund. First, the EUR/USD rate itself: a sustained move of more than 5% in either direction will produce a visible wedge between the two share classes’ returns, and that’s the clearest real-world demonstration of what the hedge is and isn’t doing. Second, interest-rate differentials between the US Federal Reserve and the European Central Bank — when those widen, the cost of hedging widens too, and the H2-USD class bears that cost invisibly. And third, any disclosure of the fund’s underly ing currency breakdown in its next factsheet. The strategy holds global assets; knowing how much of the book sits outside EUR and USD would sharpen any assessment of residual FX exposure after the hedge. That last one is the piece of data that would most change how you read the H2-USD label.
Funds Benchmark provides research and tooling for institutional and private investors. Nothing in this note is investment advice or a recommendation to buy or sell any specific fund. Past performance is not a reliable indicator of future results.