Currency Hedging for UK Investors: Diversifying Beyond GBP
The UK is 4% of global equities. Your salary is sterling. Your house too. Your pension default too. The single-currency bet most UK investors don't know they're taking.
UK share of global equity market cap
UK is roughly 4% of global market cap. Most UK investors still hold 30%+ in UK shares.
Key takeaways
Holding all your assets in the UK exposes you to concentrated risks like economic downturns, currency depreciation, political instability, and underexposure to global markets.
Geographic diversification helps reduce these risks by spreading investments across different economies, leading to reduced correlation, currency diversification, and access to global growth.
A simple way for UK investors to achieve geographic diversification is through global all-world index ETFs, such as Amundi Prime All Country World ETF, Vanguard FTSE All-World UCITS ETF, and iShares MSCI World UCITS ETF.
More advanced options include foreign stocks and currency-hedged ETFs to further diversify your portfolio globally.