Should Euro Investors Hedge U.S. Index Funds?
The costliest mistake: ignoring the currency, not the fees So, here’s the thing: for euro-based investors buying U.S. index funds, the real budget-buster isn’t the 0.05% vs. 0.10% expense ratio debate. It’s the euro-dollar moving 10-20% while you’re arguing over 5 basis points. That sounds dramatic, I know, but it’s not theory, it’s the historical tape. From January 2021 (around EUR/USD ~1.23) to late September 2022 (~0.95), the euro dropped roughly 22% against the dollar. Then it rebounded to ~1.12 by July 2023, about a 17% swing the other way. Even earlier, from March 2020 (~1.06) to January 2021 (~1.23),…