Jan 26, 2010
What has currency done to US bond market returns for foreign investors? While various currencies have performed notably differently, the overall Deutsche Bank Dollar Index ETF is a good proxy to make a weighted judgment of overall effect. Since February 2007, when the UUP was launched, there has been a depreciation of the dollar of about -6%. With domestic currency bond market index returns in the +17 to +19% over this period and understanding that some currencies fared much better or worse than the underlying DB dollar index, you can see that currency can be quite a meaningful contribution to overall return.
To update this chart to today or visualize similar relationships using other ETF combinations, go here: http://www.etfreplay.com/charts.aspx