However, after rebasing those figures into dollars, sterling and euro investors have seen negative returns across every single category (see below).
The discrepancy highlights the impact currency valuations have on a portfolio’s global purchasing power, the firm asserted.
Noticeably, an investor’s choice of base currency had a greater impact on the strength of this purchasing power than the investment risk profile.
However, the findings also show that as the risk profile of a portfolio rises, the impact of dollar appreciation becomes more muted.
“Even for equity portfolios, over-weight exposure to domestic companies seems to cause a relative performance impactbut it is nowhere near as severe as for lower risk portfolios,” said ARC.
