What does "hedged" mean?

I want to buy some dividend ETFs.

I have been looking at the excellent sheet of @j4ck https://docs.google.com/spreadsheets/d/1o9Yu0BZHmL5eC_GqNTW47zvvW6AiXaB6CYnG8JRzRSw/edit#gid=0

I don’t understand why IHHG is “hedged” https://www.ishares.com/uk/individual/en/products/295888/ishares-high-yield-corp-bond-ucits-etf-gbp-hedged-dist-fund

I found only this

There is USD cash holding

A lot less GBP cash holding

What does this all mean for me as an investor? Is this good for me in case the GBP plunges to new depths?

Hedged ETFs use the same asset allocation as the non-hedged version, but they use forward exchange contracts, which is essentially a contract to exchange currency sometime in the future thus eliminating the effect of currency fluctuations. Hedged ETFs will benefit UK ETFs if the pound slides further but won’t bounce back as fast if pound recovers. Similarly a weaker pound will benefit overseas unhedged ETFs.

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Thank you. It sounds like a hedged ETF like the above might be good to mitigate the impact of Brexit. I’ll do my own further research of course.

I am not that familiar with hedged ETFs to be honest, imo they are only for people with a strong view of the currency and maybe even for shorter term investments; as in the long run, currency fluctuations tend to even out i.e. they hedge each other. You may take protect against the falling pound but not recover as fast the UK economy improves in the next 5-10 years and also incur additional costs as the hedged ETFs are more expensive. I am not 100% sure now, but in IHHG the underlying assets (US corporate bonds) are in USD so by hedging you will negate a benefit (not a loss) from a further pound drop not the opposite. Maybe somebody else can clarify, as I said I’m not sure because I’ve never invested in hedged ETFs though I always thought this was the case.

See comparison below, red - SHYU USD unhedged, black - IHHG GBP hedged, orange - GBPUSD.
Sorry I didn’t include time-frame below, that is from March 2018 to present

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