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FX impact calculator: asset return vs. currency effect
Decompose the EUR return of a foreign-currency investment — cross term stated separately.
Last updated: 16 August 2026 · By The Acutic Research Team
The EUR return of an investment denominated in a foreign currency has two sources: the price change of the asset in its own currency and the change in the exchange rate. The two combine multiplicatively: 1 + EUR return = (1 + asset return) × (1 + FX effect). Written additively: EUR return = asset return + FX effect + cross term — the interaction of the two moves, always stated separately here. The calculator below decomposes a position exactly this way; all prefilled rates are fixed illustrative values, not live data.
Change in the asset's own currency, e.g. −10 or 25.
Prefilled rates are illustrative examples, not live data. ECB convention: foreign currency per 1 euro.
Note: the calculator uses only the rates you enter. The prefilled values are fixed illustrative examples — not live data; no rate lookup is made. Daily reference rates are published by the ECB.
The decomposition in three steps
Every rate on this page follows the ECB reference-rate convention: foreign currency per 1 euro (1.10 means €1 = $1.10). The EUR value of one dollar is therefore 1 ÷ rate — when the rate rises, a dollar is worth fewer euros.
- FX effect: rate at purchase ÷ rate at valuation − 1. Example: 1.05 → 1.10 gives -4.55% — the dollar eased against the euro.
- Multiplicative link: 1 + EUR return = (1 + asset return) × (1 + FX effect). The two effects do not simply add — they act on each other.
- Additive decomposition: EUR return = asset return + FX effect + cross term, with cross term = asset return × FX effect. The three contributions sum exactly to the total.
Worked example: €10,000 in a USD asset
€10,000 goes into a USD asset at a rate of $1.05 per euro; the asset gains 10% in dollars, and at valuation the rate stands at $1.10 per euro (illustrative example rates, not live data):
- Purchase: €10,000 × 1.05 = $10,500.00.
- +10% in dollars: $11,550.00.
- Valued at 1.10: $11,550.00 ÷ 1.10 = €10,500.00 — EUR return +5.00%.
- Decomposition: asset +10.00%, FX effect -4.55%, cross term -0.45% — sum +5.00%.
A +10% move in dollars became +5.00% in euros — the exchange rate absorbed half of the price move.
| Asset (USD) | Rate purchase → valuation | FX effect | Cross term | EUR return |
|---|---|---|---|---|
| +10.00% | 1.05 → 1.05 | 0.00% | 0.00% | +10.00% |
| +10.00% | 1.05 → 1.10 | -4.55% | -0.45% | +5.00% |
| +10.00% | 1.10 → 1.05 | +4.76% | +0.48% | +15.24% |
| 0.00% | 1.05 → 1.10 | -4.55% | 0.00% | -4.55% |
| -10.00% | 1.10 → 1.05 | +4.76% | -0.48% | -5.71% |
| -10.00% | 1.05 → 1.10 | -4.55% | +0.45% | -14.09% |
Rates in USD per 1 euro (ECB convention). Illustrative example rates, not live data. Every row is computed from the formula shown above at render time; asset + FX effect + cross term = EUR return.
The cross term — small, but not zero
Many summaries add only the asset return and the FX effect and let the remainder vanish silently. That remainder is the cross term: asset return × FX effect. In the worked example it is -0.45% — small, because both moves are moderate. With large moves it grows quadratically: a +30% asset move with a rate of 1.20 → 1.00 (FX effect +20.00%) produces a cross term of +6.00% — on a €10,000 position that is €600.00 from the interaction alone. This is why the calculator always reports it as its own row.
Special cases
- Unchanged exchange rate: FX effect and cross term are zero; the EUR return equals the asset return in the foreign currency.
- FX-only move: with a flat asset price, the entire EUR move is currency — row 4 of the table.
- Offsetting moves: a price decline in the foreign currency can be partly offset by a firmer foreign currency — row 5: −10% in USD, but only -5.71% in euros.
- Both negative: a price decline and a weaker foreign currency reinforce each other — row 6: −10% in USD becomes -14.09% in euros.
- Rounding: the display rounds to two decimals; internally the library keeps full floating-point precision so the decomposition closes exactly.
FAQ
What is the FX effect of a foreign-currency investment?
The FX effect is the part of the EUR return that comes solely from the change in the exchange rate between purchase and valuation. It is the EUR-value change of the foreign currency: with rates quoted as foreign currency per 1 euro (ECB convention), it equals the rate at purchase divided by the rate at valuation, minus 1.
How do asset return, FX effect and EUR return relate?
Multiplicatively: 1 + EUR return = (1 + asset return in the foreign currency) × (1 + FX effect). Written additively: EUR return = asset return + FX effect + cross term, where the cross term is the product of the two moves.
What is the cross term?
The cross term is the interaction of the two moves: asset return × FX effect. For small moves it is small — +10% price and −4.5% currency produce roughly −0.5 percentage points. For large moves it becomes substantial: +30% price and +20% currency produce +6 percentage points from the interaction alone.
Why does my EUR return differ from the return shown on a chart?
Charts show the price in the asset's trading currency, for example US dollars. A EUR-denominated portfolio values the same position after conversion at the prevailing exchange rate. The difference is the FX effect plus the cross term — both are absent from the trading-currency chart.
Does a rising dollar rate per euro mean a gain or a loss on a USD position?
In the ECB convention (USD per 1 euro), a rising rate means the dollar has weakened against the euro. The FX effect on a USD position is then negative: the same dollars are worth fewer euros at valuation.
What is a currency-hedged share class (EUR hedged)?
A currency-hedged share class largely neutralises the FX effect through currency forward contracts. The EUR return then essentially follows the underlying portfolio's price change, minus hedging costs, which vary with the interest-rate differential between the two currency areas. Whether a share class is hedged is stated in its factsheet.
Currency effects in your own portfolio
Import your portfolio into Acutic via CSV or PDF export and position values appear in your display currency — converted amounts always carry the rate source and timestamp. Related fundamentals: TWROR vs. IRR and the fair index comparison; the feature overview covers the analysis side.
Further reading: TWROR vs. IRR: why your tracker shows a different return and Your portfolio vs. the MSCI World: the fair comparison. Create free account.
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