If you’re comparing the performance of your ETF (e.g. EQQQ or an S&P 500 tracker) with what you see on sites like Yahoo Finance, you might notice a difference. This is usually due to currency movements.
Here’s what’s going on:
Many ETFs, especially those tracking overseas markets, hold investments priced in foreign currencies.
If you’re investing from the UK, your returns are shown in pounds sterling (GBP).
When the value of GBP changes relative to other currencies (like the US dollar or euro), this affects the returns you see.
For example, if the USD weakens against GBP, your returns in GBP will appear lower, even if the underlying investments have done well in USD terms.
This doesn’t just apply to US investments
Currency effects aren’t limited to USD-based ETFs. Any unhedged ETF with non-GBP holdings (e.g. European equity ETFs, emerging market funds, or global bond ETFs) will be impacted by exchange rate movements.
Hedged vs unhedged ETFs
Unhedged ETFs are exposed to currency risk, so performance in GBP can be boosted or reduced depending on FX movements.
Hedged ETFs use financial instruments to reduce this impact but not all ETFs offer a hedged version.
The bottom line
If you're seeing a performance discrepancy between what we show and another source, it's likely the effect of exchange rates. But if something looks off or unexpected, feel free to reach out, we’re happy to check it for you.