A fellow blogger (Y HAT) has a somewhat different view on investmenting USD currency investments:
As I write this the Canadian dollar is trading at $1.07 to the US greenback and most Canadian finance articles I’m reading are suggesting you should jump into US equities – these are cheap by historical standards and the Canadian dollar is bound to retreat. This blog’s opinion is that no one knows were the loonie is headed next. Consequently, you should save yourself a lot of stress by insuring your portfolio against currency movements.
First of all, there is no right answer. Just like there is no formula for how much fixed-income you should hold versus how much equities, or how much emerging markets/small caps you should hold versus everything else. It’s all about how much risk you can handle. Certainly the advice that you should “save yourself a lot of stress by insuring your portfolio against currency movements” does not apply to everyone.
I agree that “no one knows were the loonie is headed next,” just as no one knows where the Canadian equities market is headed next or where the bond market is headed next, which is why I hold a bit of each to reduce my overall risk and/or increase my overall returns through diversification. In the long run though, by the time I retire, I don’t think swings in the USD/CAD exchange rate will amount to any significant gain/loss in my portfolio, but I may have gained more significantly through rebalancing (better with less correlated assets) and lower costs. Maybe in the future I will look back and with perfect hindsight I will wish I had bought XIN instead of VEA, but my present opinion is that I do not think anyone needs to get their knickers in a knot over purchasing US dollar-based investments.