Foreign ETF = Foreign currency?

[nostradamus]

Question: If I buy an ETF which is in a foreign market, does this help to protect me from a declining US dollar? In other words, would it work something like this?

1. I buy a China ETF for X dollars
2. The dollar goes down by Y% against the yuan
3. Performance was flat: the price of the ETF is now Y% more in dollars?

I’m assuming that when I buy a foreign ETF, somewhere along the way my dollar is converted to the foreign currency at the prevailing rate of the day. I own the stock in that foreign country so if I sell it later, it sells in the foreign currency then is converted back to US dollars at the sale date’s prevailing rate?

[Raybyrnes]

Algebra is easier when you plug in some numbers. Use some simple numbers and you can work this out yourself.

[Raybyrnes]

Algebra is easier when you plug in some numbers. Use some simple numbers and you can work this out yourself.

[Raybyrnes]

Algebra is easier when you plug in some numbers. Use some simple numbers and you can work this out yourself.

[Eugene]

Yes, of course – assuming that underlying stocks don’t go down against the yuan in the mean time. Much of Chinese economy is export oriented and depreciating dollar hurts Chinese exporters. Ideally you’d want to find an ETF with minimal exposure to the U.S. market (either direct or indirect).

[nostradamus]

Raybyrnes come on now. You gotta read my original post, it’s not a question of math it’s a question of how the markets work. I wish it were all about math ‘cuz then I’d be good at this investing thing (math scholarships paid for my UCSD degrees). I will admit to being dumb on stock markets.

Thank esmith, I’m hoping that’s they way it works! Yesterday China’s market crashed a little bit so I snatched up some bargain EWH, PGJ, and FXI ETFs. Looks like they’re bouncing back already (for once I’m LONG on these stocks):

[img_assist|nid=5292|title=|desc=|link=node|align=left|width=466|height=119]

[Raybyrnes]

Your playing with 60K. Many mutual fund companies start to offer break points at 50K. Wonder how you would do if you picked a good solid index mutual funds and just dollar cost averaged into it for the next 3 to 5 years. Wonder how this would compare to your timing. It may be fairly boring but over the long haul it has proven to beat 90% of the market timers. Your a math guy, probability says your system is going to work against you.

[nostradamus]

Thanks! What is a break point? Does that mean if I invest $50k+ they will not charge me any loads or fees?

I never liked mutual funds because of their turnover rate and my conspiracy theories that fund managers can be corrupted.

[Raybyrnes]

break points

break points in essence are volume discounts. as aretail investor buying lets’s say 10k in a mutual fund you may pay .65 of 1% in a management fee. at 50 k the same identical fund might only run you .35 of one percent.

this holds true for load funds aswell. let’ look at the american funds. typically they carge 5.75% load on a shares of their funds. put a million bucks with them and they waive the load. there are disconts on your way to a million aswell.

why is this important. because if you begin to aggregate your invetments you can get to a million fairly quickly. 2 kids that you will pay for college 200k. a rollover ira from a company 150k. Some rebalancing in the IRA 100K. wifes rollover 150K. Now if you own real estate for a eriod of time and feel that there is a lot of dead equity in the home you can elect to pull this out and put it to work 300k.

All of audden you have the best money management team in the world managing a million dollars of your wealth for an annual cost of between 5 to 8 k a year. i would say that isn’t too bad a deal.

pay attention to the break points early. you want to stay with the a great family of funds. this gets more challenging to do later on because later you have to deal with tax consequences if you are trying to sell to reach these break points.

[Raybyrnes]

break points

break points in essence are volume discounts. as aretail investor buying lets’s say 10k in a mutual fund you may pay .65 of 1% in a management fee. at 50 k the same identical fund might only run you .35 of one percent.

this holds true for load funds aswell. let’ look at the american funds. typically they carge 5.75% load on a shares of their funds. put a million bucks with them and they waive the load. there are disconts on your way to a million aswell.

why is this important. because if you begin to aggregate your invetments you can get to a million fairly quickly. 2 kids that you will pay for college 200k. a rollover ira from a company 150k. Some rebalancing in the IRA 100K. wifes rollover 150K. Now if you own real estate for a eriod of time and feel that there is a lot of dead equity in the home you can elect to pull this out and put it to work 300k.

All of audden you have the best money management team in the world managing a million dollars of your wealth for an annual cost of between 5 to 8 k a year. i would say that isn’t too bad a deal.

pay attention to the break points early. you want to stay with the a great family of funds. this gets more challenging to do later on because later you have to deal with tax consequences if you are trying to sell to reach these break points.

[Raybyrnes]

break points

break points in essence are volume discounts. as aretail investor buying lets’s say 10k in a mutual fund you may pay .65 of 1% in a management fee. at 50 k the same identical fund might only run you .35 of one percent.

this holds true for load funds aswell. let’ look at the american funds. typically they carge 5.75% load on a shares of their funds. put a million bucks with them and they waive the load. there are disconts on your way to a million aswell.

why is this important. because if you begin to aggregate your invetments you can get to a million fairly quickly. 2 kids that you will pay for college 200k. a rollover ira from a company 150k. Some rebalancing in the IRA 100K. wifes rollover 150K. Now if you own real estate for a eriod of time and feel that there is a lot of dead equity in the home you can elect to pull this out and put it to work 300k.

All of audden you have the best money management team in the world managing a million dollars of your wealth for an annual cost of between 5 to 8 k a year. i would say that isn’t too bad a deal.

pay attention to the break points early. you want to stay with the a great family of funds. this gets more challenging to do later on because later you have to deal with tax consequences if you are trying to sell to reach these break points.

[nostradamus]

Thanks! What is a break point? Does that mean if I invest $50k+ they will not charge me any loads or fees?

I never liked mutual funds because of their turnover rate and my conspiracy theories that fund managers can be corrupted.

[nostradamus]

Thanks! What is a break point? Does that mean if I invest $50k+ they will not charge me any loads or fees?

I never liked mutual funds because of their turnover rate and my conspiracy theories that fund managers can be corrupted.

[Raybyrnes]

Your playing with 60K. Many mutual fund companies start to offer break points at 50K. Wonder how you would do if you picked a good solid index mutual funds and just dollar cost averaged into it for the next 3 to 5 years. Wonder how this would compare to your timing. It may be fairly boring but over the long haul it has proven to beat 90% of the market timers. Your a math guy, probability says your system is going to work against you.

[Raybyrnes]

Your playing with 60K. Many mutual fund companies start to offer break points at 50K. Wonder how you would do if you picked a good solid index mutual funds and just dollar cost averaged into it for the next 3 to 5 years. Wonder how this would compare to your timing. It may be fairly boring but over the long haul it has proven to beat 90% of the market timers. Your a math guy, probability says your system is going to work against you.

[nostradamus]

Raybyrnes come on now. You gotta read my original post, it’s not a question of math it’s a question of how the markets work. I wish it were all about math ‘cuz then I’d be good at this investing thing (math scholarships paid for my UCSD degrees). I will admit to being dumb on stock markets.

Thank esmith, I’m hoping that’s they way it works! Yesterday China’s market crashed a little bit so I snatched up some bargain EWH, PGJ, and FXI ETFs. Looks like they’re bouncing back already (for once I’m LONG on these stocks):

[img_assist|nid=5292|title=|desc=|link=node|align=left|width=466|height=119]

[nostradamus]

Raybyrnes come on now. You gotta read my original post, it’s not a question of math it’s a question of how the markets work. I wish it were all about math ‘cuz then I’d be good at this investing thing (math scholarships paid for my UCSD degrees). I will admit to being dumb on stock markets.

Thank esmith, I’m hoping that’s they way it works! Yesterday China’s market crashed a little bit so I snatched up some bargain EWH, PGJ, and FXI ETFs. Looks like they’re bouncing back already (for once I’m LONG on these stocks):

[img_assist|nid=5292|title=|desc=|link=node|align=left|width=466|height=119]

[Eugene]

Yes, of course – assuming that underlying stocks don’t go down against the yuan in the mean time. Much of Chinese economy is export oriented and depreciating dollar hurts Chinese exporters. Ideally you’d want to find an ETF with minimal exposure to the U.S. market (either direct or indirect).

[Eugene]

Yes, of course – assuming that underlying stocks don’t go down against the yuan in the mean time. Much of Chinese economy is export oriented and depreciating dollar hurts Chinese exporters. Ideally you’d want to find an ETF with minimal exposure to the U.S. market (either direct or indirect).

[bubba99]

The problem with ETF’s is that they only protect against the declining dollar – you do not actually make any return.

For example, you buy fxe at $120. The dollar declines by 2%. Your investment in fxe is now worth $122.40 But gold, oil, and goods manufactured in Europe are now 2% more expensive. And in theory everything here at home also costs 2% more. With the “new” market basket used in calculating consumer price index, it is hard to see the increase, but it is there over time.

All the fund has done is preserve your wealth, not add to it. Right now FXE is up $.66 as the dollar has fallen another half cent or so. But in Europe, your hotel room just went up by the same amount.

[DaCounselor]

“The problem with ETF’s is that they only protect against the declining dollar – you do not actually make any return.”
____________________________

???????

How about interest earned at or near the prevailing local rate?

[DaCounselor]

“The problem with ETF’s is that they only protect against the declining dollar – you do not actually make any return.”
____________________________

???????

How about interest earned at or near the prevailing local rate?

[DaCounselor]

“The problem with ETF’s is that they only protect against the declining dollar – you do not actually make any return.”
____________________________

???????

How about interest earned at or near the prevailing local rate?

[bubba99]

The problem with ETF’s is that they only protect against the declining dollar – you do not actually make any return.

For example, you buy fxe at $120. The dollar declines by 2%. Your investment in fxe is now worth $122.40 But gold, oil, and goods manufactured in Europe are now 2% more expensive. And in theory everything here at home also costs 2% more. With the “new” market basket used in calculating consumer price index, it is hard to see the increase, but it is there over time.

All the fund has done is preserve your wealth, not add to it. Right now FXE is up $.66 as the dollar has fallen another half cent or so. But in Europe, your hotel room just went up by the same amount.

[bubba99]

The problem with ETF’s is that they only protect against the declining dollar – you do not actually make any return.

For example, you buy fxe at $120. The dollar declines by 2%. Your investment in fxe is now worth $122.40 But gold, oil, and goods manufactured in Europe are now 2% more expensive. And in theory everything here at home also costs 2% more. With the “new” market basket used in calculating consumer price index, it is hard to see the increase, but it is there over time.

All the fund has done is preserve your wealth, not add to it. Right now FXE is up $.66 as the dollar has fallen another half cent or so. But in Europe, your hotel room just went up by the same amount.

[Author]

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