Currency-Adjusted Investment Return Calculator
Asset and currency returns compound; they should not be added mechanically. Define the currency move from the investor’s home-currency perspective.
What it calculates
An overseas investment’s home-currency return depends on both the asset and exchange rate. This calculator compounds the local-market return with the currency’s change against the investor’s home currency, subtracts fees, and estimates the ending home-currency value.
How this currency-adjusted investment return calculator works
The calculator multiplies the asset growth factor by the foreign-currency growth factor, subtracts entered costs, and applies the combined return to the starting home-currency value.
Formula
Home-currency return = (1 + local asset return) × (1 + currency move) − 1 − costs
Depositary receipts, fund hedges, multiple revenue currencies, taxes, and conversion spreads can make realized returns differ from this simple model.
Primary specifications
Before you use the result
Assumptions
- • Currency move is measured as foreign-currency appreciation against the home currency.
- • Asset and FX periods are identical.
- • Taxes, hedges, distributions, and interim cash flows are excluded.
Quick start
- 1. Measure the asset return in its listing currency.
- 2. Enter the currency move using the stated direction convention.
- 3. Compare unhedged and hedged scenarios including actual hedging costs.
Inputs and units
| Input | Unit | Default |
|---|---|---|
| Starting home-currency value | US dollars | $10,000 |
| Asset return in local currency | percent | 12% |
| Foreign currency move vs home currency | percent | -5% |
| Fees and conversion costs | percent | 0.5% |
Worked example (hypothetical)
Currency-Adjusted Investment Return Calculator: worked example
Hypothetical example using the calculator's default inputs. The numbers are illustrative, not a forecast or a quote.
| Starting home-currency value | $10,000 |
|---|---|
| Asset return in local currency | 12% |
| Foreign currency move vs home currency | -5% |
| Fees and conversion costs | 0.5% |
| Home-currency return | 5.90% |
|---|---|
| Ending home-currency value | $10,590 |
| Currency contribution | -5.60% |
With these inputs, the home-currency return is 5.90%.
Frequently asked questions
Why multiply asset and currency returns?
The exchange-rate change applies to the asset’s ending local-currency value, so the two growth factors compound.
What sign should I use for the currency move?
Use a positive number when the foreign currency strengthens against your home currency and a negative number when it weakens.
Does this model currency hedging?
Not directly. A hedged scenario can set currency movement near zero and include expected hedge costs in fees.
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