VWCE not down as much as it should?

For investors outside the US. Personal investments, personal finance, investing news and theory.
Sister forums: Canada, Spain (en español)
---------------
Post Reply
Topic Author
Polaroid22
Posts: 5
Joined: Wed May 18, 2022 3:38 am

VWCE not down as much as it should?

Post by Polaroid22 »

Hello,

So I was looking into why vwce is not down that much 8.5% YTD, while the VTSAX is down 15.94% ytd.
So it has something to do with the currency exchange.
VWCE is listed in EUR, which has depreciated about 9% YTD compared to the USD, the currency about 60% or more of VWCE is listed in. This has considerably buffered the drop in VWCE YTD.

But what does it mean for us Europeans though. What if the war stops? Will the Euro rise again, and if it will how will it affect VWCE? Will we loose more if the Euro rises again against the dollar?

Thanks!
Elysium
Posts: 4120
Joined: Mon Apr 02, 2007 6:22 pm

Re: VWCE not down as much as it should?

Post by Elysium »

Polaroid22 wrote: Wed May 18, 2022 3:51 am But what does it mean for us Europeans though. What if the war stops? Will the Euro rise again, and if it will how will it affect VWCE? Will we loose more if the Euro rises again against the dollar?
Thanks!
Yes, and Yes.

The standard response would be no one knows nothing, try not to to guess the currency movements, and instead stay the course with your plan. Those are good answers, but since you wanted to know I gave the short answers above.
Tellurius
Posts: 631
Joined: Mon Jul 23, 2018 6:42 pm

Re: VWCE not down as much as it should?

Post by Tellurius »

It’s really difficult to get responses on the non-US forum. 10:1 less interest from forum members as it skews American pretty strongly

Don’t know how you can work around it, if you want many answers

I also own VWCE, we’ll see how things go, there’s nothing we can control
“And how shall I think of you?' He considered a moment and then laughed. 'Think of me with my nose in a book!” | ― Susanna Clarke, Jonathan Strange & Mr Norrell
Topic Author
Polaroid22
Posts: 5
Joined: Wed May 18, 2022 3:38 am

Re: VWCE not down as much as it should?

Post by Polaroid22 »

So whats the best outcome we can hope for then?
Whats the best way to earn on this? Should we invest in the dollar or euro currency itself?
Tellurius
Posts: 631
Joined: Mon Jul 23, 2018 6:42 pm

Re: VWCE not down as much as it should?

Post by Tellurius »

Polaroid22 wrote: Thu May 19, 2022 1:48 am So whats the best outcome we can hope for then?
Whats the best way to earn on this? Should we invest in the dollar or euro currency itself?
I think all investments carry risk. So we shouldn’t do anything because this is just one of the risks

You earn in Euros, no? You also spend in Euros

so what’s the issue
“And how shall I think of you?' He considered a moment and then laughed. 'Think of me with my nose in a book!” | ― Susanna Clarke, Jonathan Strange & Mr Norrell
Laurizas
Posts: 519
Joined: Mon Dec 31, 2018 3:44 am
Location: Lithuania

Re: VWCE not down as much as it should?

Post by Laurizas »

Polaroid22 wrote: Thu May 19, 2022 1:48 am Whats the best way to earn on this?
The best way is doing nothing.
Polaroid22 wrote: Thu May 19, 2022 1:48 am Should we invest in the dollar or euro currency itself?
No
User avatar
galeno
Posts: 2653
Joined: Fri Dec 21, 2007 11:06 am

Re: VWCE not down as much as it should?

Post by galeno »

World stocks skew American. VWCE has 59% in US domiciled equities.

World bonds also skew American. AGGG has 44% in USD denominated bonds.
Tellurius wrote: Wed May 18, 2022 4:54 pm It’s really difficult to get responses on the non-US forum. 10:1 less interest from forum members as it skews American pretty strongly

Don’t know how you can work around it, if you want many answers

I also own VWCE, we’ll see how things go, there’s nothing we can control
KISS & STC.
Topic Author
Polaroid22
Posts: 5
Joined: Wed May 18, 2022 3:38 am

Re: VWCE not down as much as it should?

Post by Polaroid22 »

Does anybody know a good video on this topic? (or good detailed blog post?)
kdfi
Posts: 3
Joined: Sun Jul 17, 2022 8:39 am

Re: VWCE not down as much as it should?

Post by kdfi »

Polaroid22 wrote: Thu May 19, 2022 4:52 pm Does anybody know a good video on this topic? (or good detailed blog post?)
This is a good article about the topic: https://www.justetf.com/en/news/etf/the ... -etfs.html
Mikeknive
Posts: 1
Joined: Tue Aug 16, 2022 5:20 am

Re: VWCE not down as much as it should?

Post by Mikeknive »

Polaroid22 wrote: Thu May 19, 2022 4:52 pm Does anybody know a good video on this topic? (or good detailed blog post?)
Magbe this will help you?
https://youtu.be/UC3cJHZRsgI
jg12345
Posts: 427
Joined: Fri Dec 11, 2020 12:03 pm

Re: VWCE not down as much as it should?

Post by jg12345 »

Elysium wrote: Wed May 18, 2022 4:16 pm
Polaroid22 wrote: Wed May 18, 2022 3:51 am But what does it mean for us Europeans though. What if the war stops? Will the Euro rise again, and if it will how will it affect VWCE? Will we loose more if the Euro rises again against the dollar?
Thanks!
Yes, and Yes.

The standard response would be no one knows nothing, try not to to guess the currency movements, and instead stay the course with your plan. Those are good answers, but since you wanted to know I gave the short answers above.
One clarification:
1) What if the war stops? Will the Euro rise again, and if it will how will it affect VWCE? => if the war stops, it is _likely_ that the Euro will rise against the USD, but who knows. maybe by the time the war stops (if it ever will) the likelihood of better EUR/USD exchange rate is already priced in

2) Will we loose more if the Euro rises again against the dollar? => this is a more definite yes, because it's simple math and mechanics given currencies and % weight of US stocks in VWCE.

Doing nothing (i.e., following your IPS) is the best.

FYI, as I see below you ask about "should we invest in currencies": forecasting currency exchange is definitely harder than forecasting stock markets. So the answer to your currency investing is a big no. if you (correctly) thought to invest in the full market because the market knows better than any of us, the same thinking is even more relevant when it comes to currencies.

But those points were pretty clear from other posters. More links though:

viewtopic.php?p=6063183

https://www.bogleheads.org/wiki/Currenc ... _investors
Post Reply