WEALTH MANAGEMENT you would have achieved if you had invested directly into the Euro fund with your dollars: €138 x 1.30 = $180 You can clearly see that investors receive the same return whether they invest in the local currency investment or an investment vehicle investing in the same underlying investments but denominated in a different currency. Using investment vehicles denominated in dollars reduces the regulatory, transaction and operational costs and does not change the investment risk. It does add marginally to the transaction costs as you will convert currency at the beginning and the end of the investment, but if the investment is held, like it should be, for an extended period of time, then this cost should be immaterial. When it comes to stocks, the ups and downs of foreign exchange can indeed enhance or hurt returns in the short-run. Some managers may use fancy techniques to hedge – or protect - investors from the vagaries of the foreign exchange market. In the long-term, however, academic studies show that hedging isn’t all that effective when it comes to stocks. Global diversification is seen as the best friend for savers. When investors understand just where currency risk lies, they can make choices about how to manage that risk. A misunderstanding of these risks can result in investors not being able to achieve their goals.
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Risk Warnings and Important Information The value of investments and the income from them can fall as well as rise. You may not get back what you invest. Past performance is not an indicator of future results. The above article is for educational purposes and does not take into account the specific goals or requirements of individuals and is not to be construed as advice or recommendation to invest. You should carefully consider the suitability of any strategies along with your financial situation prior to making any decisions on an appropriate strategy. MASECO LLP trading as MASECO Private Wealth is authorised and regulated by the Financial Conduct Authority, the Financial Conduct Authority does not regulate tax advice. MASECO Private Wealth is not a tax specialist.
financial interests to design and implement strategies for tax-efficient and risk-managed asset growth. She has written numerous white papers regarding fundamental financial planning and investment strategies for US connected individuals and has previously been a speaker on financial planning topics at numerous places including both The World Bank and International Monetary Fund (IMF). Andrea graduated from University of Virginia’s McIntire School of Commerce with a degree in Finance and Management and completed her MBA at Imperial College London. Andrea holds her UK Investment Advice Diploma and US Series 65 license.
Andrea Solana is Head of Advanced Planning at MASECO Private Wealth where she helps to provide financial planning and wealth structuring advisory services to US expatriates in the UK and British nationals in the US. Andrea spent the first decade of her career with a well-known Washington DC based international tax and global wealth management firm where she gained considerable experience advising high net worth individuals with multi-jurisdictional
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