Why is wealth now a currency question, not just an investment one?
Because wealth rarely sits within one country any more – so the life it funds is increasingly lived in more than one currency. Many financially successful families accumulate various forms of cross-border interest without ever making a deliberate decision to ‘go global’. Over time, a typical picture might include:
- Overseas investments held directly or through funds
- International property, whether a holiday home, an investment, or a future residence
- Family members living, studying, or working abroad
- Regular spending requirements in more than one currency
A portfolio might be measured in sterling, but the life it supports increasingly plays out in dollars, euros, and beyond. That's why currency deserves to be treated as a planning issue, not simply an investment one. It touches not just how wealth grows, but where and how it will eventually be used – whether that's funding a child's education abroad or planning an international retirement.
What is currency risk?
Currency risk is the chance that movements in exchange rates change the value of your wealth when measured in your home currency. Your return depends on two things at once: how the underlying investment performs, and what happens to the currency it's held in.
A simple example makes this clear. Imagine a family holding US shares that rise 10% in a year – on the face of it, a good result. But if the dollar falls 15% against sterling over the same period, the family could still end up with a loss once the value is converted back to pounds. The investment did its job; the currency undid it.
The reverse is also true, and it matters more than many investors realise. Sterling has tended to weaken during periods of market stress – in 2008, after the 2016 referendum, and in early 2020 – so overseas holdings have often cushioned UK investors just when they needed it most. That pattern isn't guaranteed. In April 2025, the dollar fell alongside US shares. Hedging can reduce currency swings, but it also costs, which can remove that cushion and erode a positive return. This is why it's worth deciding on deliberately rather than by default.
How much hidden currency exposure is in a typical UK portfolio?
Often far more than investors expect – and often heavily weighted towards the US dollar. You don't need overseas property or foreign bank accounts to have significant currency exposure. It's very often sitting inside a perfectly ordinary, UK-based portfolio.
The reason is the structure of global markets. Unhedged global equity funds carry substantial exposure to the US dollar. US companies make up more than 70% of the MSCI World Index by value, so an investor who holds one of these funds, including many 'global' trackers, may, in practice, have a large proportion of their wealth exposed to the dollar – even if they've never knowingly bought anything priced in dollars.
So, the idea that a sterling-based investor is insulated from currency movements is often a myth. The first step in managing that exposure is simply knowing it's there.
Why do wealthy families end up with currency concentration risk?
Because significant concentrations tend to build up in two different parts of a family's wealth without anyone intending it. Once you start looking, a pattern often emerges in the wealth of financially successful families.
On one side, there's often heavy sterling exposure. A UK business, a London home, a country estate, UK property investments, and pensions all tie a family's fortunes closely to the pound. On the other, an investment portfolio built around global equities can create a substantial – and largely unnoticed – tilt towards the US dollar.
The result is wealth weighted heavily in a particular currency at two ends: sterling through business and property, and dollars through investments. Neither is necessarily wrong, but a concentration you haven't deliberately chosen is worth understanding. Managing it well starts with mapping where your exposures genuinely lie.
How can matching assets to future liabilities reduce currency uncertainty?
By holding some of your wealth in the same currencies you expect to spend in – so future costs are less exposed to exchange rate swings. For many families, this is the most compelling reason to think about currency, and it has nothing to do with chasing investment performance.
Future liabilities might include:
- School and university fees for children and grandchildren overseas
- Retirement in another country
- The purchase or upkeep of international property
- Support for family members living abroad
- Charitable giving to causes or foundations overseas
If significant spending is going to happen in dollars or euros in years to come, holding assets aligned with those future needs can materially reduce uncertainty. A family planning to fund a decade of overseas education, for instance, could gain peace of mind from knowing that some of their wealth is already positioned in the relevant currency, rather than hoping exchange rates move helpfully when the fees fall due. It won't remove all risk, however – the investments themselves can still fall in value, and plans can change.
The principle is simple: think about where you'll be spending, and in what currency, and let that shape how your wealth is held today.
What are the main tools for multi-currency wealth planning?
Once you know where your exposure lies, several tools can help bring it into line with your plans:
- Multi-currency accounts that allow wealth to be held and spent in more than one currency
- Diversified investment portfolios that spread exposure thoughtfully rather than by accident
- Currency hedging, where appropriate – this can reduce the effect of exchange rate movements, but it has costs and can mean missing out on gains if the currency moves in your favour
- International banking arrangements that can help make cross-border life simpler and more efficient
- Cross-border succession planning, to help wealth pass as smoothly as possible between family members in different countries
For internationally mobile families, a useful starting point is deciding which currency you measure your wealth in – that answer shapes almost everything else. The value lies in making these choices deliberately, as part of a coherent plan, rather than reacting to currency swings after they've already affected you.
Should you try to predict currency movements?
No – and trying to is rarely a reliable way to protect wealth. Currencies move, sometimes sharply, and those movements ripple through everything from investment portfolios to property values and business fortunes. A period of significant currency swings can:
- Increase the volatility of an investment portfolio
- Change the value of overseas property and international business interests
- Alter your purchasing power abroad, for better or worse
It's tempting to guess where sterling or the dollar is heading next, but in our experience that's rarely a dependable path. Currency markets are notoriously difficult to predict, even for professionals.
The more reliable objective isn't prediction but alignment: making sure your currency exposure reflects your long-term goals, your future liabilities, and your appetite for risk. Get that alignment right, and currency swings become something you've planned for, rather than something that catches you by surprise.
As families become more internationally connected, wealth planning increasingly extends beyond a single country, tax system, or currency. Understanding how currency exposure affects purchasing power, investment returns, and future financial goals is an important part of protecting wealth across borders.
If you'd like to see where your currency exposure really sits, one of our advisers can help you map your wealth by currency, set against when and where you expect to spend it. If you're already a client, speak to your Rathbones adviser, or complete our enquiry form below to start the conversation.
