13.35% return this year on this fund? Really?!?

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13.35% return this year on this fund? Really?!?

Post by doingit » Wed Sep 13, 2017 9:45 pm

This fund:

http://lt.morningstar.com/j78r68ij2p/sn ... F0GBR04SKK

Morningstar shows a 13.35% return for 2017 when selecting USD. See...


However when selecting EUROs, the return for 2017 is only 0.56%. See


This is where I'm confused.

95% of my investment in this fund is in EURO (td direct lux). But I no longer earn or live in EURO. I earn USD and track everything in USD.

So while I like to see that 13.35% return, I'm concerned it's all fake. The euro got about 12% stronger vs the USD this year. I'm concerned when the EURO drops, that 13.35% return also drops. This fear keeps me from further investing in this fund.

What's the correct way to think about this?

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Re: 13.35% return this year on this fund? Really?!?

Post by Pajamas » Wed Sep 13, 2017 10:14 pm

The number of shares you own of VTWSX is equal to a certain amount of USD which is equal to a certain amount of EUR at any point in time but the relationship between each of them changes over time. If you invest 1,000 USD or 1,000 EUR, you would get different number of shares of VTWSX, unless 1 USD happened to be worth 1 EUR, which has occurred in the past. If you sold your VTWSX, you would get a different amount of USD than if you were paid in EUR.

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Re: 13.35% return this year on this fund? Really?!?

Post by grabiner » Thu Sep 14, 2017 10:18 am

The relevant return for you is in the currency you spend, not the currency you invested in. If you have EUR 1000, convert it to USD 2000, and buy an investment rises 10% in USD, but the EUR rises 10% against the USD, then you now have an investment which is worth EUR 1000 and USD 2200. Now, if you spend euros, you haven't gained anything, as you don't have any more euros than you had before. An investor who spends dollars benefited from a 10% gain.
David Grabiner

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