Blended investments of different currencies

[swisspm]

Dear Mark,

I have a question regarding how a blended investment handles different currencies. If fund A is in USD and fund B is in EUR, but my default currency is CHF, which currency should I use when setting up the blended investment? Will it correctly switch between the two underlying currencies and the default currency? The reason I ask is that I have created some simple examples and, in some area, the results do not look intuitively correct.

Many thanks and regards, Pierre

[Mark]

Hello Pierre,

Split adjusted and non-exchange rate adjusted prices will be used for the update. So, in this case, if you have USD and EUR investments with CHF default, you'll be combining USD and EUR prices for the target blended investment. It doesn't matter what the default currency is in this case.

[swisspm]

Thank you Mark for the clarification. The blended investment function is very powerful and it would be good if it could handle multiple currencies. Perhaps a good feature for a future version.

[Djobydjoba]

@swisspm

If fundA is in USD and fundB is in EUR, and you want to create a blended investment with these two funds but converted in CHF, it is possible. This requires first to create two new investments in CHF, calculated from FundA and FundB and from the exchange rate investments USDCHF and EURCHF:

FundA_CHF = FundA * USDCHF
FundB_CHF = FundB * EURCHF

For these creations you will use the feature "Create investment from investments" (in File > File Operations)

Then use FundA_CHF and FundB_CHF to create the blended investment.

NB: in fact, for a blended investment, what may be important is that the investments used in it are in the same currency, whatever the currency. This means the blended investment in USD should look identical than in CHF. So instead of creating two new investments in CHF, a faster approach could be to create only one new investment:
FundB_USD = FundB * EURUSD
Then use FundA and FundB_USD to create the blended investment.

The blended investment function is very powerful

It is! And the "Create investment from investments" in great too. I use it to create a lot of relative strength investments. For example Russell 2000 index / S&P500 index, to measure the relative strength of the small/mids caps compared to the large caps. There are tons of useful relative strengths to create to analyze the markets.

[swisspm]

@ Djobydjoba

Thank you, this is really great. I appreciate your taking the time for a detailed explanation.

“Create investment from investments” is new to me, and I can see myself using it a lot!