Impact of KRW-USD Exchange Rate on ETF Investment Strategies
The recent maintenance of the KRW-USD exchange rate at 1400 has led to currency-exposed ETFs outperforming currency-hedged versions. This trend is largely attributed to the forex gains from the rising exchange rate, with some forecasts predicting a potential climb to 1500. In this climate, financial experts suggest that diversifying some portfolios with currency-hedged options could mitigate exchange rate volatility risks. While currency-exposed ETFs continue to report higher returns, it is noted that long-term investments may favor these options.
Moreover, analysis of the FTSE Global All Cap index reveals that the global stock market has more than tripled over the past decade, yet South Korea's share remains a modest 1.26%. This underscores the urgency of expanding overseas portfolios. Ye Kyung-jin from Mirae Asset Management recommends indirect investments for retirement planning by investing in ETFs such as SPY, VOO, and IVV, which track the S&P500, while also suggesting dividend stability-focused ETFs like VIG and SCHD.
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