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THE EFFECTS OF CURRENCY EXCHANGE RATES ON INVESTMENTS

After Russia invaded Ukraine, Russian companies equity value went down 12.5% in rouble terms, however, due to the rouble collapsing against sterling Russia MSCI index tracker went down 42.9%.

UK Sterling has depreciated in value against most major currencies over the last 50 years. Overseas investments have hugely benefitted UK funds as a result. If an investor had held euro overseas investments since May 2000 they would have benefitted by 45% due to the changes in relative currency values.

Currency fluctuations are very hard to predict and can happen due to a number of reasons. This adds weight to the theory that diversification is the key to successful investing, investing in different asset classes, in different regions.

Diversification occurs within major UK company due to 70% of income coming from overseas in the FTSE 100 and 50% coming from overseas in the FTSE 250.

This is why Cambridge Pensions recommends multi-asset funds as the best way to manage a pension, lots of diversification yet benefitting from the superior growth found within equities.

PLEASE CONTACT CAMBRIDGE PENSIONS FOR INVESTMENT ADVICE

While we keep information on the website as up to date and as accurate as possible, the information on this website does not form part of our advice process. Cambridge Pensions Ltd cannot accept any liability for any decisions made by a client or member of the general public based on any information contained on this website. The value of your investments can go down as well as up and you may get back less than has been paid in.

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