Skip to Content
Fund Spy

The Almighty Dollar

Options for capitalizing on the dollar's rise.

Mentioned: , , , , , ,

On March 2, 2015, the U.S. Dollar Index--a trade-weighted index of the U.S. dollar versus six major currencies--reached its highest level since 2004. In the year to date, the index has gained 5.33%, on the back of a 12.25% gain in 2014. The dollar’s rise has been quick and steep, negatively affecting the returns of most international-equity, local-currency bond, and multicurrency funds in 2014. For the year, the Morningstar foreign large-blend category fell 4.98%, and the multicurrency category lost 1.64%--much of that weakness caused by currency exposure.

However, over the previous 12 years, foreign-currency exposure benefited investors. For the six-year period from February 2002 through March 2008, the U.S. Dollar Index slid 43.9%, a trend that greatly benefited funds with unhedged foreign-currency exposure. In the subsequent six years, from March 2008 to March 2014, the U.S. dollar traded relatively flat, apart from short-lived flight-to-safety rallies in late-2008 and mid-2010. The chart below shows the Inverse U.S. Dollar Index, which expresses the returns of a trade-weighted basket of foreign-currency exposure.

A.J. D'Asaro does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.