Multi-currency

Multi-currency portfolios: the FX layer under your returns

Your Apple position is up 30% since 2022. In dollars. In euros, your money, it might be up 22% or 39%, depending on what EUR/USD did over your holding period. If you've never checked which, you don't actually know your return.

This is the quiet embarrassment of international investing: most people who own foreign assets have never once seen their true return in their own currency. The broker shows the position in dollars, the news reports the index in dollars, and the exchange rate does its work invisibly in between. The gap between the number you watch and the number you live on can persist for years without anyone pointing it out. Consider this the pointing-out.

Two returns in every foreign position

A European holding US stocks owns two exposures: the stock, and the dollar. They add up (or cancel out) into your real return. Over short periods it's noise; over 2022–2026, EUR/USD swung enough to move multi-year returns by double digits either way.

There's no avoiding the choice: either you accept currency exposure as part of the bet, or you hedge it. But you can't even make that choice consciously if your tracker mixes currencies.

The arithmetic is worth spelling out once, because it surprises people. Roughly speaking, your home-currency return is the asset's local return combined with the currency's move against your home currency over the same period. When both go your way, the effects compound pleasantly. When they oppose each other, a good stock year can shrink into a mediocre one on your side of the exchange rate, or a flat stock year can look like a gain that the company never actually delivered. Neither outcome is visible if you only ever look at the dollar chart.

Where mixed-currency bookkeeping goes wrong

The failure mode is rarely dramatic; it is a slow accumulation of small inconsistencies. A cost basis recorded in dollars sits next to a market value mentally converted at today's rate, producing a "gain" that is partly a currency artifact. A dividend received in dollars gets added to euro dividends as if they were the same unit. A spreadsheet applies one convenient exchange rate to five years of transactions, silently rewriting history at today's prices. Each shortcut is understandable, and each one bends your numbers a little. Add a second foreign currency, a UK stock in pounds, say, and the bends multiply. The result is a portfolio whose reported return no one, including its owner, can actually derive.

The base currency principle

Serious tracking converts everything to one base currency, the one you live in, at historical rates. Your cost basis: the euros you paid at that day's rate, not today's. Each dividend: converted on its payment date. The portfolio chart: your holdings valued in euros daily, so currency swings show up where they happened.

Your broker sort of does this (DeGiro's Totaal EUR column, for instance), but only transaction by transaction. The portfolio-level view, "how much of my gain is stocks, how much is dollars", almost no broker shows.

The phrase doing the heavy lifting there is historical rates. Converting everything at today's rate looks tidy and destroys information: it makes your past purchases cost what they would cost now, which is a different question from what they did cost. Only conversion at the rate of each transaction date preserves the actual sequence of events, the euros that genuinely left your account, the euros each dividend genuinely delivered. Once history is preserved, everything downstream becomes honest: gains, cost bases, and time-series charts all speak the same unit at the moment it applied.

A worked miniature makes it concrete. Suppose you bought a US stock when a dollar cost you about 95 euro cents, and today a dollar costs you a euro and a bit. Convert your old purchase at today's rate and your recorded cost quietly inflates, which shrinks your apparent gain, or the reverse, depending on which way the rate moved. Neither distortion announces itself; the numbers still look plausible. That plausibility is exactly the danger. A return that is wrong by a few points for reasons you cannot see will steer real decisions, about rebalancing, about hedging, about whether a position deserves more money, in directions the facts never supported.

Why hedged share classes don't settle it

A reasonable objection: if currency risk bothers you, buy the hedged version of the fund and move on. Hedging is a legitimate choice, but it is a portfolio decision, not a bookkeeping one, and it does not remove the need for base-currency tracking. Hedging costs something, it applies fund by fund rather than across your whole portfolio, and most investors hold at least some unhedged positions anyway, individual US stocks being the obvious case. Whether you hedge or not, the question "what did my money actually do, in my currency" still needs an answer, and only consistent base-currency bookkeeping provides one. Deciding whether to hedge is exactly the kind of decision that requires first seeing how much of your historical return was currency.

The benchmark has a currency too

Here is the subtle version of the same problem. If you compare your portfolio against the S&P 500 measured in dollars while your portfolio is measured in euros, the comparison is contaminated by exchange-rate movements that affected one side and not the other. A fair benchmark converts the index into your base currency using the same historical rates applied to your own holdings, so that both lines experience the same currency weather. This matters more than it sounds: over a multi-year stretch, the currency term alone can flip the verdict on whether you're beating the index. A comparison that ignores it isn't conservative or optimistic, just wrong in an unknown direction.

Choose your lens

Which base currency is "right" depends on the question. Your life runs in euros; the market thinks in dollars; maybe you're moving to London. The data is the same, the lens should be yours to pick.

There is no universally correct answer here, only a correct answer per question. "Can I afford my life" is a home-currency question. "Did I pick good companies" is arguably a local-currency question. "Should I rebalance toward Europe" benefits from seeing both. The mistake is not choosing the wrong lens; it is never realizing a lens exists, and treating whatever unit your broker happens to display as the truth.

That's why BullBenchmark lets you flip the entire dashboard between EUR, USD, GBP and more, with one setting that your profile remembers. Same portfolio, your currency, consistent historical conversion throughout.

What this means in practice

None of this requires you to become an FX analyst. It requires three habits. Keep your full transaction history, because historical conversion needs historical transactions, a topic that also decides your tax numbers, as the January 1st valuation problem shows. Pick one base currency for your headline numbers and hold every account to it, especially if your money is spread across platforms, where multi-broker tracking compounds the currency problem. And once a year, glance at how much of your return was assets and how much was exchange rate. Some years the answer will be boring. The years it isn't are precisely the years you want to have known.

The first week of BullBenchmark is free, no card, upload the export you just downloaded and see where you stand.