How Currency Risk Affects You
Gain some control over an often powerful force.
Note: This article is part of Morningstar's December 2014 Guide to Better Investment Picking special report. An earlier version of this article appeared in November 2012.
If you take the time to leaf through one of those big, densely written fund prospectuses that arrive in your mailbox every now and then, you'll see a long section called "Risks" that attempts to lay out every possible way the fund could end up disappointing you. A fund that invests in foreign securities might include "currency risk" on that list. Sometimes that idea lands under a broader discussion of "foreign investment risk."