If you grew up outside the United States, holding multiple currencies and having international investments is almost second nature. And while global diversification has long been a cornerstone of prudent investment strategy for all investors inside and outside the U.S., it has mostly meant allocating across asset classes and geographies. Today, diversification has taken on a broader approach, particularly for globally mobile families, who are now exploring taking direct positions in foreign currencies.
For U.S. nationals, and especially for those with multiple citizenships, multi-currency investing can offer diversification, inflation protection, and enhanced flexibility for future spending needs. However, it also introduces significant regulatory, tax, and operational considerations that must be carefully managed.
As advisors with strong international backgrounds, we have the privilege of working with clients around the world, helping them navigate multi-tax jurisdictions, various investment opportunities, and structuring assets in a way that balances investment opportunities with their and their heirs’ life goals.
In many cases, this work also intersects with jurisdictional diversification, since the choice of custodian often determines not only what currencies can be held but also under which legal and regulatory system those assets reside. A Swiss multi-currency account, for example, provides both foreign currency exposure and jurisdictional diversification, tying together the monetary and legal dimensions of a family’s global wealth strategy.
If you have children or grandchildren who may attend university abroad, there is a possibility that they may stay abroad. Universities like McGill (Canada), St. Andrews (Scotland), or INSEAD (France) are attracting more U.S. students than ever before. Of course, there are many other reasons affluent families seek to diversify beyond the U.S. dollar:
- Concerns about U.S. debt and fiscal policy
- Desire to mitigate reliance on a single currency’s performance
- Retirement plans that include significant travel or longer-term foreign residence
- Intergenerational planning needs that cross borders
Holding assets denominated in euros, Swiss francs, Singapore dollars, or even emerging market currencies can provide resilience against domestic risks and better align your investment strategy with potential future international endeavors.
Culture, Norms, Rules, and Laws May Differ
Having local cultural knowledge and expertise dealing with international counterparts makes a huge difference. For U.S. citizens in particular, multi-currency exposure comes with unique complexities:
- Taxation: The U.S. taxes its citizens on worldwide income regardless of residency or secondary citizenship. In addition, FATCA and FBAR reporting apply broadly.
- Foreign asset taxation is complex and may be subject to additional unintended taxes due to currency fluctuations and tax treaty changes. Discussing this with a tax professional before making any decision is critical.
- Investment Restrictions: Non-U.S. mutual funds and ETFs are typically treated as Passive Foreign Investment Companies (PFICs), triggering onerous IRS filings and potentially punitive tax rates.
- Currency Risk: While multi-currency holdings can hedge against U.S. dollar depreciation, they also introduce additional volatility.
- Residency Rules: Tax domicile and location of banking activity affect compliance burdens and reporting requirements.
- Access: Some foreign institutions restrict U.S. clients due to FATCA, while non-U.S. passports can unlock otherwise limited banking and investment opportunities.
Despite the challenges, there are many ways we have helped and can help find the appropriate vehicle and structure to achieve your goals. Here are some examples:
- Multi-Currency Bank Accounts (MCAs): Useful for liquidity management and near-term spending, though not geared toward long-term growth.
- Foreign Currency Bonds: Exposure to sovereign debt (e.g., German Bunds, JGBs) or emerging market issuers; ETFs can provide efficient access.
- Global Equities & ETFs: Direct purchase of non-U.S. equities or use of U.S.-listed ETFs targeting international markets, with or without currency hedges.
- Precious Metals & Commodities: Gold, silver, and commodity ETFs act as currency-neutral hedges; offshore physical storage provides geographic diversification.
In the End, It’s About YOU!
Multi-currency strategies should be integrated with personal objectives, spending needs, and residency considerations. Stability-oriented investors may prefer CHF, EUR, or SGD, whereas yield seekers may pursue BRL, MXN, or INR for higher return potential, albeit with greater volatility.
Illustrative portfolio elements could include:
- Core Liquidity: Swiss or Singaporean multi-currency accounts
- Growth Assets: U.S.-listed ETFs held in trust structures to avoid PFIC complications
- Real Estate: Direct or via holding companies, particularly in the EU or LATAM
- Alternatives: Private equity or private debt, structured through compliant foundations or trusts
- Gold: Custodied in Switzerland or Singapore
Example Portfolio Allocation (U.S. National with EU & LATAM Passports):
- 50% USD assets: Treasuries and U.S. equity ETFs
- 20% EUR assets: Eurozone equities, German Bunds, Parisian real estate
- 15% CHF liquidity: Swiss multi-currency accounts, gold in Zurich or Liechtenstein
- 10% Global commodities: Gold, copper, oil ETFs
- 5% Emerging markets: Brazilian fixed income, Indian equity ETFs
There Should Be a Plan
Given the complexity of cross-border wealth structuring, it is essential to consult with qualified legal and tax professionals who understand your unique circumstances before considering these strategies. For ultra-high-net-worth families, additional structuring tools, such as foreign holding companies established in Luxembourg, Malta, or Singapore to hold real estate or operating businesses abroad, may benefit from favorable tax treaties. Foundations and trust equivalents used in civil law jurisdictions like Liechtenstein, Monaco, or Panama can support estate planning and multi-currency ownership, though they require meticulous attention to U.S. reporting rules. Private Placement Life Insurance (PPLI), when investments are wrapped in Luxembourg or Swiss PPLI structures, may offer tax deferral and estate planning advantages if coordinated properly. As always, consult with your tax and legal advisors before implementing any of these approaches to ensure they are appropriate for your situation.
Building Bridges Across Oceans
Multi-currency investing is often most effective when paired with jurisdictional diversification. While allocating wealth across currencies can mitigate monetary and inflationary risks, placing those same assets under multiple legal systems adds an additional layer of resilience. For example, a euro or Swiss franc position held through a U.S. brokerage account provides currency exposure, but the same holdings custodied abroad extend protection into a different legal framework. These strategies work in tandem to reduce concentration risk, both monetary and jurisdictional, helping families build a more robust and flexible global wealth structure.
Conclusion
Multi-currency investing can serve as a powerful complement to traditional asset allocation, especially for families with global footprints. Yet the added tax, compliance, and structuring complexities make it essential to proceed with care.
At Wealthspire, we view multi-currency strategies and jurisdictional diversification as complementary pillars of global wealth resilience. When thoughtfully integrated, they enable affluent families to safeguard their assets against both economic and political risks, positioning wealth for long-term continuity across generations and borders. For those unwilling to navigate the full complexity of multi-currency investing, U.S.-domiciled global funds and ETFs can provide international diversification, including non-dollar exposures, without the same operational and reporting challenges. If you’d like to connect with one of our advisors to learn more about multi-currency strategies and jurisdictional diversification, contact us today.
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