Mitigating VGS Currency Risk: Unleashing the Power of AI Legalese Decoder for Every Country’s Currency
- October 7, 2023
- Posted by: legaleseblogger
- Category: Related News
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Title: The Role of Currency Risk in VGS and How AI Legalese Decoder Can Help
Introduction
When considering the relationship between AUDUSD and VGS, I initially overlooked the broader spectrum of currency risk associated with VGS. However, upon closer examination, I discovered that there are thirty different countries represented in VGS. Therefore, it is not only AUDUSD but also movements in AUDGBP, AUDEUR, AUD\[insert country in VGS\], and other currency pairs that can impact the returns on VGS investments.
Exploring Currency Risk in VGS
With thirty different countries featured in VGS, the impact of currency fluctuations becomes a crucial factor in determining investment returns. While AUDUSD certainly plays a significant role, it is important to consider the influence of other currency pairs on the overall performance of VGS.
Understanding the Weight of AUDUSD
Although VGS is comprised primarily of US companies, it does not necessarily mean that AUDUSD will have the biggest impact on returns. While the performance of AUDUSD will undoubtedly affect the returns to some degree, it is equally essential to monitor other currency pairs. Each country’s economic conditions and exchange rates need to be evaluated due to their potential effects on the returns.
AI Legalese Decoder: Assisting with Currency Risk Analysis
In this complex scenario, AI Legalese Decoder can provide significant assistance. This sophisticated tool utilizes advanced algorithms to decode complex financial jargon and legal language, simplifying the understanding of currency risk and its impact on VGS investments. By leveraging AI Legalese Decoder, investors can gain valuable insights and make informed decisions regarding potential risks and returns in their VGS portfolios.
Expanding on Investment Returns
When referring to returns, we consider the gains made upon selling our VGS holdings after a 30-year investment period following an initial lump sum investment. The accomplishment of favorable investment returns depends not only on the overall performance of the stocks held within VGS but also on the currency risk associated with the international exposure of these holdings.
Conclusion
In conclusion, while AUDUSD does play a crucial role in determining the returns of VGS due to its significant weighting in US companies, it is important to acknowledge the influence of other currency pairs featured in VGS. The AI Legalese Decoder can assist investors in comprehending the complex dynamics of currency risk, empowering them to make well-informed decisions and potentially maximize their investment returns over a 30-year period.
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While technically US is dominant with respect to shareholdings in VGS, those companies are often global and consequently those US shares fluctuate based on the currencies of their operational segmentation. So it’s not necessarily as easy as using the country breakdown to understand the currency risk.
VGAD and VGS are both exposed to currency risk, in one you are putting all your eggs in the AUD basket and in the other you are putting your eggs in a somewhat diversified basket.
ÔÇ£The following table shows the breakdown of equity exposure in VGS, for the top 10 countries, as of 30 June 2023.
ÔÇö
United States 70.7%
Japan 6.3%
United Kingdom 4.2%
France 3.5%
Canada 3.3%
Switzerland 2.8%
Germany 2.4%
The Netherlands 1.3%
Sweden 0.9%
Denmark 0.9% ÔÇ£
ThatÔÇÖs over 95%, so a bit narrower and less Euro-centric than you may have thought!
ETFs with US companies like VGS and IVV would be generating higher returns now with the weak AUD, that’s why returns on IVV are higher than the S&P500 at the moment. This will reverse if AUD recovers.