This topic is probably not interesting for people who are predominately invested in their home market. My home market is small (Switzerland) which is why I have around 60% non-Swiss stocks in my portfolio. Both the USD and the EUR have depreciated around 30% against the Swiss Franc over the past 20 years.
Individual stocks:
My portfolio consists of 40% US stocks. These are the usual big tech names with significant international revenues. My thinking is that if the USD depreciates against other currencies, their products and services become cheaper/more competitive internationally which will be reflected in a higher stock price. This is sort of a “natural hedge” against a USD depreciation, which is why there is no real risk from this FX exposure in the long run.
Does that thinking make any sense to you or am I seeing this wrong?
Obviously, there is some short-term noise. Like the USD dropping around 10% in the past 6 months, which took quite the hit on my portfolio.
ETFs:
I know there are currency-risk hedged ETFs but I read somewhere that hedging costs are not part of the TER (unsure if this is actually true, any insights on this are appreciated).
Do any of you use currency risk hedged ETFs?
In general: do you take any measures in managing your stock portfolio in regards to currency risk?
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