Exchange Rate Effect on Global Funds

Qyburn

Hi,

I was wondering what the effect of exchange rate is on global funds like for example the Vanguard Life Strategy series.  If the Pound drops relative to other currencies do the fund values go up in GBP terms (as each pound is worth less) or do they fall for some other reason. Or does it not make a direct difference.

Cheers

Swipe

If the pound goes down your fund goes up.

dunstonh

I was wondering what the effect of exchange rate is on global funds like for example the Vanguard Life Strategy series.

When the asssets in priced in Sterling and the Pound rises, global assets go down in value.  Pound falls, global assets go up in value.

However, the pressure at the moment is only on US equities. Not the rest of the world.   Despite the media focus on the dollar rate for Sterling, every currency in the world is down against the dollar.   When compared with other currencies, Sterling is pretty much in its modern range.

Having a currency hedged fund for US equities, at this time, may well be a good idea but it would be unnecessary for other countries/regions.   It would likely only be a short term measure as well as you would look to move off it down the road.   So, not the sort of thing someone using a multi-asset fund is likely to do.