False Loyalty

Do I, as a European investor, need to stay loyal to the euro in my portfolio? And what if I move to the United States or Japan? Do I then have to switch and back my new home currency?

No. The primary goal in equity investing is to find the best companies in the world – regardless of where I live.

International investors always hold positions in multiple foreign currencies. In the Gutmann equity strategy, these include the U.S. dollar, Japanese yen, Swiss franc, Swedish krona, British pound, and Australian dollar. In total, 70% is invested in foreign currencies. On the flip side: only 30% of investments are in companies within the euro area.

There are clear advantages to investing across different economies and currency zones. The broader the hunting ground, the greater the selection of top-tier companies across sectors. It also reduces dependence on a single political system and improves diversification: correlations – the relationships between individual stocks – tend to be lower than within a single country or economic region.

What matters is the company.

The currency risk of any individual position cannot be ignored. But it makes a significant difference whether a company operates in just one currency zone or globally.

Take Unilever, for example – a global company with production sites and sales markets across multiple currency regions. It doesn’t matter whether you buy Unilever shares in euros (Amsterdam exchange) or British pounds (London exchange). The fact that the company had listings and, until 2020, dual headquarters in both countries is rooted in its history. Unilever was formed in 1929/1930 through the merger of the Dutch “Margarine Unie N.V.” and the British soap manufacturer “Lever Brothers Ltd.”

So the actual currency exposure an investor takes is not entirely clear-cut. Since Unilever reports in euros, there is at least a reporting effect in any given year. All revenues and costs are translated into euros for accounting purposes, which can make results look better or worse depending on exchange rates. But the intrinsic value of this global business does not change because of that.

For this reason, long-term business success matters far more than currency movements. It will not be the euro or the pound in the case of Unilever, the Swiss franc for Nestlé, or the U.S. dollar for Procter & Gamble that determines success over the next ten years. It will be strong products, meaningful innovation, global supply chains, cost efficiency, and smart capital allocation.

Currency fluctutations create uncertainty. 

The U.S. dollar tends to attract attention when it weakens significantly within a calendar year – such as in 2017, 2020, and 2025. If one had hedged the dollar in exactly those years using currency forwards, equity returns would have been higher.
But expecting to predict those years in advance is unrealistic. There will always be someone who gets it right in a given year and promotes it loudly. But it’s never the same person. Luck is hard to repeat.

Interestingly, while the euro–U.S. dollar exchange rate often becomes a topic of discussion, it has barely changed over the past ten years. What has always mattered far more is focusing on the underlying business models.