Currency exposure

Currency exposure — the share of your portfolio denominated in each currency, treated in this course as a chosen allocation, not a suffered risk. The logic in three clauses: growth in USD (where the compounding evidence lives, plus the peso’s ~2–2.5%/yr average depreciation as tailwind — with real reversal risk any given year); income in PHP (income that must cross an exchange rate to buy groceries isn’t reliable income); future PHP liabilities (Level 3 mortgages) serviced by PHP assets. The agency owner’s structural edge: earn USD, invest USD, spend PHP — receivables fund the UCITS core without ever paying a conversion spread.

First used in: 2.6 · Portfolio construction