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Home bias when pound is at multi-year low?

k6chris
k6chris Posts: 787 Forumite
Part of the Furniture 500 Posts Name Dropper Photogenic
in Savings & investments
Trying to get my head around allocation when home currency (GBP) is near a multi-year low vs global currency (USD).  Based on my allocation plan, I have some new money to put in a global mid-market fund. Does investing new money (GBP) in USD funds, when the pound is so weak, still make sense?  Would it make more sense to either find a currency hedged US midmarket equity fund, or invest in GBP and home based funds, VMID for instance? 

Thanks
"For every complicated problem, there is always a simple, wrong answer"

Comments

  • ColdIron
    ColdIron Posts: 10,330 Forumite
    Part of the Furniture 10,000 Posts Hung up my suit! Name Dropper
    Hedging can make sense for bonds but not IMO for equities
  • InvesterJones
    InvesterJones Posts: 1,650 Forumite
    1,000 Posts Fourth Anniversary Name Dropper
    Depends what you think will happen to the respective currencies and markets over your investment period.

    If you think UK market will grow best and pound will strengthen vs dollar then home based makes sense.
    If you think US market will grow best and pound will strengthen vs dollar then currency-hedged US fund makes sense.
    If you think US market will grow best and pound will stay the same or weaken against the dollar then USD based US fund makes sense.

    Of course, account for differing fees as usual.
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