Skip to main content

You are here

Blog Listing Page

Index IDEA: Dollar down index up

The past year’s steady decline in the US dollar relative to foreign currencies has translated into higher returns for non-US indexes based in US dollars, according to global index provider FTSE Russell.

To illustrate, the FTSE All-World® ex US Index had a 28% return for the 12-month period ended January 5, 2018 as based in US dollars as compared to a 19.5% return as based in local currencies for the countries in the index for the same time period. And the FTSE Emerging Index had a 35% return for the 12-month period ended January 5, 2018 in US dollars as compared to a 29% return as based in local currencies.

Alec Young, managing director, global markets research, FTSE Russell:

“Currency translation is an important component of the diversification potential of foreign stocks and the relative performance of international stocks as measured by non-US indexes for US investors. For example, a rising US dollar relative to non-US currencies will have a negative impact on US dollar-based non-US index returns. On the other hand, a falling US dollar relative to non-US currencies will have a positive impact on US dollar-based non-US index returns. Last year was a case in point as a weak US dollar led to significantly higher dollar denominated international equity index performance across both developed and emerging markets.”

Get more information on the FTSE Global Equity Index Series.

 

---------------

Data source: FTSE Russell, data as of January 8, 2018. Past performance is no guarantee of future results. All index returns cited are without currency hedging. Please see the disclaimer for important legal information.

© 2018 London Stock Exchange Group plc and its applicable group undertakings (the “LSE Group”). The LSE Group includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE TMX Global Debt Capital Markets Inc. and FTSE TMX Global Debt Capital Markets Limited (together, “FTSE TMX”) and (4) MTSNext Limited (“MTSNext”). All rights reserved.

FTSE Russell® is a trading name of FTSE, Russell, FTSE TMX and MTS Next Limited. “FTSE®”, “Russell®”, “FTSE Russell®” “MTS®”, “FTSE TMX®”, “FTSE4Good®” and “ICB®” and all other trademarks and service marks used herein (whether registered or unregistered) are trade marks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and are owned, or used under licence, by FTSE, Russell, MTSNext, or FTSE TMX.

All information is provided for information purposes only. Every effort is made to ensure that all information given in this publication is accurate, but no responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for any errors or for any loss from use of this publication or any of the information or data contained herein.

Views expressed by Alec Young are as of January 10 and subject to change. These views do not necessarily reflect the opinion of FTSE Russell or the LSE Group.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Russell Indexes or the fitness or suitability of the indexes for any particular purpose to which they might be put.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing in this IDEA should be taken as constituting financial or investment advice. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group index data and the use of their data to create financial products require a licence from FTSE, Russell, FTSE TMX, MTSNext and/or their respective licensors.

Past performance is no guarantee of future results. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of investable assets.

Blog Listing Page