qanda

Q: Should I Diversify Across Many Currencies?  

Q:  As a tax-minded Belgian, I need to invest in European ETF’s or funds. There are many funds available in different currencies but would it really matter as I am a young investor and expect never-ending currency wars between central banks?

A: Your suggestion to sticking with one currency is okay. I would not be adverse to young investors in the U.S. building a portfolio with U.S. asset classes only. There will be times that the diversification of currencies will offer some profitable rebalancing opportunities, but the additional returns will probably not change your lifestyle. Having said that, I use a balance of U.S. and international asset classes because it protects against the catastrophic impact of U.S. politicians doing something really harmful to our dollar. Of course many Americans probably believe that many countries in Europe are doing something really harmful to their economies and don’t want any of their money in those markets.