Stock Market Returns Lost in Translation

One of the side effects of a weaker dollar is that the returns for foreign investors who invest in US assets are diminished.  While the value of the asset may rise in dollar terms, if the dollar is losing value, the investor takes a hit when they convert their funds back into their domestic currency.  For example, while the S&P 500 has risen 20.2% so far this year in US dollars, investors outside of the US have generally seen much less impressive returns.  In the table below, we looked at the YTD returns of the S&P 500 for investors in various currencies.  Of the currencies we looked at, the only one that has seen a benefit from the currency translation is the Argentinian Peso.  Returns have been diminished once fluctuations are taken into account for all other currencies.  And of course some countries have been affected more than others.  So far this year, Brazilian investors who bought the S&P 500 at the end of last year have lost nearly 12 reals for every 100 they invested on January 1st.

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Comments

[Kid Dynamite]

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[Jon Giddy]

From the perspective of foreign investors, this implies that the US market still looks relatively cheap (in some cases cheaper). So it's less surprising that the nominal S&P value just keeps rising.

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