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MrHotPicks
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Monday 22 June 2026 22:52:02 GMT
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The S&P 500 returned 16% in 2025...but you only got 8%. Why? Currency risk! What can you do about it? Here's some things to note: 1. You can’t fully avoid USD exposure Even if you buy a “GBP” S&P 500 fund, the underlying companies are still priced in dollars. The fund being priced in pounds doesn’t magically remove currency risk, it just changes what you see on your screen. 2. The dollar could strengthen again 2025 was a reminder that FX moves both ways. Next year could easily be the opposite. 3. Hedging exists… but it’s not free You can buy currency-hedged versions of US equity funds, but hedging has a cost (and if currency swings the other way, hedging can work against you). It’s not a “hack”, it’s a trade-off. 4. Diversification helps Again, this is one reason I’m doing my ISA experiment as a 50/50 split between an S&P 500 fund and an All-World fund. The All-World still has plenty of USD exposure (because the US is a big chunk of global markets), but it also spreads your exposure across more currencies and countries. 5. Regular investing naturally “averages” currency If you invest monthly, sometimes you’re buying dollars when they’re cheap, sometimes when they’re expensive. Over time, that tends to smooth out the drama. And yes, there’s a weird silver lining: - If the pound is strong when you invest, you get more dollars for your money (more US shares for each £). - If the pound is weak when you eventually sell, you get more pounds back per dollar. It’s all relative :) #sp500 #investing
The S&P 500 returned 16% in 2025...but you only got 8%. Why? Currency risk! What can you do about it? Here's some things to note: 1. You can’t fully avoid USD exposure Even if you buy a “GBP” S&P 500 fund, the underlying companies are still priced in dollars. The fund being priced in pounds doesn’t magically remove currency risk, it just changes what you see on your screen. 2. The dollar could strengthen again 2025 was a reminder that FX moves both ways. Next year could easily be the opposite. 3. Hedging exists… but it’s not free You can buy currency-hedged versions of US equity funds, but hedging has a cost (and if currency swings the other way, hedging can work against you). It’s not a “hack”, it’s a trade-off. 4. Diversification helps Again, this is one reason I’m doing my ISA experiment as a 50/50 split between an S&P 500 fund and an All-World fund. The All-World still has plenty of USD exposure (because the US is a big chunk of global markets), but it also spreads your exposure across more currencies and countries. 5. Regular investing naturally “averages” currency If you invest monthly, sometimes you’re buying dollars when they’re cheap, sometimes when they’re expensive. Over time, that tends to smooth out the drama. And yes, there’s a weird silver lining: - If the pound is strong when you invest, you get more dollars for your money (more US shares for each £). - If the pound is weak when you eventually sell, you get more pounds back per dollar. It’s all relative :) #sp500 #investing

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