Worried about Your UCITS ETFs Denominated in USD? Perhaps the Funds Should be Denominated in Yen!

I will get questions seeking my views about how do I look at the issue with investing in UCITS ETFs since most of them are denominated in USD.

I think this question comes up even more as gold prices soar as compared to assets denominated in fiat currencies. The worries on the USD is not unfounded. The country is currently running a large fiscal deficit that many thinks it is sustainable.

Yet, they think that the USD is too overvalued and should be cheaper. With all this, there is a real fear that if you invest in a set of funds denominated in USD, this will affect your wealth building or retirement significantly.

Instead of sharing my views, like in the past, I happen to have a fund which is denominated in different currencies.

The Dimensional Global Core Equity can be seen as a fund advisers use to construct the core anchor position in their portfolio.

If you have cash in SGD, GBP, USD, EUR or JPY, you can invest in the Global Core Equity denominated in different currencies.

This fund has 7,774 securities spread throughout the world. They all hold the same securities, invested in the same region, in the same sectors, running the same strategy. They are just denominated differently.

If you have $1 million in the different currencies, and you invest in them since Aug 2017, here is your performance:

$1 million EUR will grow to $2.1 million EUR. Or $2.6 million JPY.

You might not be able to review the performance clearly, so here is a table of the performance year by year:

Perhaps instead of investing in a SGD Denominated Global Core Equity, we should have invested in a JPY Denominated Global Core Equity because the performance is the best!

Some might not like me talking about a large cap blend fund that is tilted towards less Mega, more value and profitable. But I really think the Global Core is much closer to an MSCI World index than some of the European, Pacific Basin, Global Targeted Value that is under Dimensional’s stable of funds.

If you don’t like… I happen to have the MSCI World performance in 11 different currencies for the past 20 years:

Whoa $1 million GBP invested in the MSCI World denominated in GBP becomes $7.2 million 21 years later.

Perhaps instead of denominating in JPY we should denominate in GBP.

So what does this all mean? Same underlying securities but so different in performance!

This time, I don’t want to talk so much during Good Friday.

I let you make your own conclusions and learnings from this. You can comment in Telegram or leave a comment below.

If you want to trade these stocks I mentioned, you can open an account with Interactive Brokers. Interactive Brokers is the leading low-cost and efficient broker I use and trust to invest & trade my holdings in Singapore, the United States, London Stock Exchange and Hong Kong Stock Exchange. They allow you to trade stocks, ETFs, options, futures, forex, bonds and funds worldwide from a single integrated account.

You can read more about my thoughts about Interactive Brokers in this Interactive Brokers Deep Dive Series, starting with how to create & fund your Interactive Brokers account easily.

Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.

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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.

You can view Kyith’s current portfolio here, which uses his Free Google Stock Portfolio Tracker.

His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.

You can read more about Kyith here.