Lately, I’ve been rethinking my portfolio as a European investor, and one thing has become crystal clear: paying attention to the euro versus dollar dynamics matters. Recently, the dollar lost over 10% of its value against the euro in just about a year. While this is part of the typical cycle for major currencies, it really hit home for me. I realized that even a short-term swing like this can compromise your annual returns if you’re too exposed to currency risk.
After some personal analysis, I decided to allocate 40% of my equity investments to CSEMU, the iShares Core MSCI EMU UCITS ETF. For me, CSEMU is a smart way to capture European market strength by investing in large and mid-cap companies across the EMU. It feels like a natural choice when you live in Europe and want your investments in local currency to buffer against dollar fluctuations.
The other 60% of my portfolio goes to XDEQ, which I recently wrote about, which offers global exposure by focusing on high-quality companies worldwide. In my view, this combination helps me strike a balance: I can tap into the growth potential around the world while still keeping a solid, local foundation to protect against those annoying currency swings.
I don’t obsessively track every little move in my portfolio, it’s all about keeping a balanced perspective rather than jumping on every market dip. This approach isn’t just about reacting to daily changes, it’s a thoughtful, long-term strategy that aims to blend stability with growth.
What about you, how do you handle currency risk in your investments? Have you found a mix that works well for your goals?
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CSEMU does seem like a very interesting ETF to invest in.
I have 4 different ETF's which is automatically bought every month :D