Hi all,
About me: I'm 27, living in Europe, and earn more than half of my income in euros, but also a solid portion in dollars (overemployed) with a good chunk of disposable income each month. All savings are in euros currently, but I'm planning to invest most of it somewhat soon.
Right now I have a big lump sum just waiting to be invested into the stock market. The majority of it is very likely to go into S&P500 tracking ETF. By default I'd go with something like iShares S&P500 Accumulating or something like that, however, the exchange rate movements this year make it hard not to at least consider going the route of EUR-hedged funds.
When you look at the index performance in euro prices, the index isn't in that much of a dip, because the downturns have been offset by the dollar skyrocketing.
Now, I understand, we don't generally know the future of forex exchanges, and EURUSD can go down as much as it can go up.
However, this is what's bugging me: the dollar skyrocketing against the euro has been significantly driven by the Fed raising rates more aggressively than the ECB, and the increasing rates and the strong dollar also pulled the stocks down. I'm afraid that when the Fed pivots, the stock market will surge, but this will also bring the dollar down, leaving me without good gains in my native currency.
On the other hand, if I buy EUR-hedged ETF shares, when the pivot happens I'll have both my shares and my native currency increasing in value. For this reason, to me it seems like buying EUR-hedged ETF shares has a higher likelihood of being a better decision at this moment, because I'll depend on two currents working in the same direction, rather than opposing (EURUSD vs S&P500).
Please tell me why I'm wrong and talk me out of any misconceptions because I was never really interested in forex.
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