S&P 500 has been falling, but for Euro and GBP investors, it hasn’t been quite so bad

on Mar 24, 2023
  • S&P 500 fell 19.4% in 2022, but with dollar appreciation, foreign investors were not as badly off
  • EUR and GBP investors especially enjoyed protection from worse losses
  • Dollar weakened in Q4, however, and 2022 was still the worst year for all investors since 2008

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As we move towards the end of Q1 of 2023, let us take a pause and look at how the stock market has performed thus far this year.

Obviously, 2022 was a year from hell for investors, as prices fell more than any year since the infamous 2008. We saw the most rapid pace of monetary tightening in recent memory, and with that, down came the market…quickly. 

The S&P 500 shed 19.4%, its worst year since 2022. 

Dollar accelerates in 2022

Nonetheless, there is an important thing missing here. And that is the dollar. Namely, not all investors in the S&P 500 are American citizens. For foreign investors, returns in local currency may be more relevant, a point which is sometimes missed. 

This year, the dollar absolutely crushed it for the first three quarters of the year, accelerating upwards as uncertainty rocked the economy and investors fled to the safest asset on the market, which is, well, the dollar. 

Its status as the world’s reserve currency means that it tends to strengthen in times of crisis – at least against other currencies. 

How did foreign investors fare in 2022?

As I wrote in this piece last December, this means that for foreign investors, the returns actually haven’t been that bad. However, with inflation softening in the final months of last year, the dollar did give back some gains to other currencies.

The below chart shows the S&P 500 returns in both dollars and foreign currencies. As you can see, on an annual basis, the overall appreciation of the dollar helped protect foreign investors somewhat. 

Another way to look at this is below, the final returns for the index across a selection of major currencies. 

What has happened in 2023?

In 2023, the dollar has bounced back a little, while the S&P 500 is up a relatively modest 3.3%. 

The current layout compared to 1st January 2022 is as follows:

So while there is no denying that it has been a rough year for investors all round, the currency effects mean the blow has been softened for foreign investors at least. 

Thus far, as Q1 draws to a close, 2023 has been a turbulent year with the banking chaos of the last few weeks sparking concern. However, prices have been…fine. For long-term investors, they will hope that the episode will be not much more than a footnote down the line, and that the S&P 500 can print a positive year – for foreign investors and Americans – after what was a crushing 2022. 


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