Originally Posted by
GTM 3442
Like you, BeeBop, I have a use (a need even) for pounds for use in the UK .
So, having decided that I’m going to have pounds, the question becomes where do I hold those pounds as they accumulate...
The exchange rate is important
I know the average value of my pounds in USD, and it’s relatively easy to construct a matrix of fund price and exchange rate which you can plug into a spreadsheet to tell you the effect of the combination of exchange rate movements and fund prices, which gives you entry, accumulate, decumulate, and exit points. After all, if the GBP/USD goes from (say) 1.21 to 1.29, your fund is worth a whole lot fewer pounds!
GBP/USD rises, Fund price rises
GBP/USD rises, Fund price falls
GBP/USD falls, Fund price rises
GBP/USD falls, Fund price falls
So to summarize – pick your asset class, pick your duration, pick your vehicle, and work out what the effect of currency movements will be, and do daily data entry.
And never forget that timing and exchange rate are incredibly important