What it means
Markets have long used animal names as shorthand for the origin of an investment. Kangaroos were Australian stocks, and the label was especially common among London dealers who traded shares in Australian miners and similar businesses.
Hearing the word in a meeting usually just means that someone is talking about Australian equities as a group. Nicknames like this are useful because they flag a shared set of risks.
Australian shares are tied to the Australian dollar, to commodity prices such as iron ore, coal and gold, and to demand from large trading partners. A fund manager who owns a basket of Kangaroos is effectively taking a view on those drivers, not just on individual companies.
Slang of this kind is not an official index or a regulated category. Different dealers have used the word in slightly different ways, sometimes for all Australian shares and sometimes mainly for resource names, so you should ask what is included before relying on it.
If the number matters, look for the actual list of securities or the name of the index. The word is easy to confuse with Kangaroo bonds, which are debt securities sold in Australia by foreign borrowers.
Kangaroos the nickname refers to shares, and Kangaroo bonds are a specific type of debt. Keeping the two apart avoids embarrassing mix-ups in documents and investor decks.
For a non-finance reader, the practical point is that country exposure should be measured, not assumed. If your pension or company investment fund holds a basket of Australian shares, the currency movement alone can change your return in home-currency terms, even when the share prices do not move at all.
In practice
Real-world examples.
Example
A London fund manager tells a client that the portfolio is overweight Kangaroos, meaning it holds more Australian shares than its benchmark does. The client asks for a breakdown by sector and learns that most of the exposure is to mining companies. The conversation shifts from a country label to a discussion of commodity risk.
Example
A global equity analyst building a report on resource stocks groups gold and iron ore producers listed in Sydney under the heading Kangaroos. She notes that the group is highly sensitive to Chinese demand. The label makes the slide easy to read, but she adds the actual company names in a footnote.
Example
A finance manager at a manufacturer with an overseas pension plan reviews its holdings. The plan holds a block of Australian shares, and the manager asks the fund whether the currency exposure is hedged. The answer decides whether a falling Australian dollar will hurt the plan's reported funding level.
Formula
Calculation
Return in home currency = (1 + share return) x (1 + currency change) - 1.
Suppose an investor in the United States holds $200,000 of Australian shares. The shares rise 10% in local terms, so the share return is 0.10. Over the same period the Australian dollar falls 5% against the US dollar, so the currency change is -0.05. The home-currency return is (1 + 0.10) x (1 - 0.05) - 1 = 1.10 x 0.95 - 1 = 1.045 - 1 = 0.045, or 4.5%. The holding is worth 200,000 x 1.045 = $209,000, compared with $220,000 if the currency had not moved.Case study
Seen in the real world.
Outback Meridian Capital is an illustrative, fictional investment firm that ran a small global fund. A client noticed the phrase Kangaroos in a quarterly update and asked what it meant, and whether the fund had made a bet on Australia.
The portfolio manager explained that the fund held $4,000,000 of Australian shares, around 8% of a $50,000,000 portfolio, mostly in mining. She showed that the position had earned 12% in local terms but only 7% after the fall in the Australian dollar.
The illustrative lesson was that nicknames hide two separate bets, one on the companies and one on the currency. After the discussion the firm added a line to its reports that showed local-currency and home-currency returns side by side.
Watch out
Common mistakes.
- Treating Kangaroos as an official index or asset class, when it is informal market slang with no fixed definition.
- Confusing Kangaroos, which are shares, with Kangaroo bonds, which are debt securities sold in Australia by foreign issuers.
- Looking only at local share prices and forgetting that currency movements can add to or remove from the return an overseas investor actually receives.
Questions
People also ask.
What do Kangaroos refer to?
They refer to Australian shares, and in older usage particularly the mining and resource companies that overseas dealers traded.
Are there similar nicknames for other countries?
Yes, markets have used animal names for other national groups, for example bulls and bears for general market direction, so it is worth checking the context to avoid mixing up meanings.
How do I find out exactly what is included?
Ask for the list of securities or the benchmark index name, because the slang itself does not define the boundaries.
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