Twenty years ago, if you had asked the average professional investor, their description of Amazon would have been something like “it sells books online and it doesn’t make any money”. Had they been particularly sniffy about the business, they might have dismissed it as a “virtual Waterstones”.

Yet today it is one of the largest firms in the world. It has revolutionised how we think about business-to-consumer (B2C) commerce and entrepreneurialism. Over those 20 years, its value has surpassed $1 trillion in value and given investors a one hundred-fold return.

For investors to benefit from future Amazon-like opportunities requires vision and long-term thinking. In the UK, Wise (LSE: WISE) has many of the characteristics of Amazon 20 years ago, including investors who dismiss it as “just a currency transfer business”. The following will explain why Wise is unlike anything else listed in the UK and has the potential to be a hugely profitable investment for those with the patience to see it through. It could become the first British company to be worth more than $1 trillion.

The story of Wise: a simple idea born out of frustration

The story of Wise began in the late 2000s at a time when the financial world was in the grips of its worst crisis in 80 years. Two Estonian expats living in London met at a party and bonded over their shared heritage. Kristo Käärmann was working as a management consultant and Taavet Hinrikus had been the first employee at Skype.

Eventually, the chat moved to a bugbear for them both – transferring money from euros and pound sterling or vice-versa. The pair had opposite problems. One was earning in euros but had expenses in pounds, whereas the other earned in pounds but had large euro expenses thanks to an Estonian mortgage.

The problem was that when money was transferred from one currency to the other, they incurred expenses that were opaque, variable and very expensive. Furthermore, depending on the day of the week and the time of the day, money might take five days to arrive in one account after leaving the other. As a smart pair of young, tech-savvy chaps, they concocted an idea to circumvent the process of using traditional transfer markets via the banking system.

The solution was to not change one currency for another. Rather, the one who earned in euros would deposit money into the other one’s euro account and vice-versa. This was done via an agreed market rate for currency transfers done via a Skype account. Since transferring money from one account to another in the same currency was a simpler process, it was almost free rather than expensive and it was considerably quicker.

Over time, the pair saved each other thousands of pounds by avoiding the usual route to move money from one currency to another. After a few years, they realised that they could provide this service to other people in similar situations, such as expats with expenses in currencies other than the one in which they earn. At the time, they thought there were 200 million people worldwide who lived like this. In January 2011, TransferWise was founded to address this market.

Wise vs Swift: how it works

The traditional way currency transfers are completed began in 1973 after a cooperative was founded in Belgium called the Society for Worldwide Interbank Financial Telecommunication (Swift). It is owned jointly by global banks and provides a messaging network for international payments.

In 1973, it was technologically advanced and allowed a process that prior to its foundation was much more onerous and costly, but Swift itself is now outdated. It works as follows:

1. A customer instructs their bank that they would like to send currency in one currency to a different currency at a different bank. The bank charges a transfer fee, which is variable but can be relatively high, especially on small amounts of money.
2. A second, intermediary bank sends the money through the Swift network, which incurs an additional fee.
3. The exchange rate is calculated and marked up for a profit.
4. The recipient bank deposits the money in a different currency in a bank account. It then charges a recipient fee.

It is cheaper than it used to be, but this whole process can add fees of more than 6% so that in effect the recipient receives 6% less money than the sender sends. Additionally, banking is not a 24/7 operation – each bank along the way has different times when it transacts currency movements. The effect is that it regularly takes several days for money to appear in the recipient’s account.

Simplistically, Wise’s model is to have pools of money in different currencies and locations. Customers instruct Wise to deduct some money in one currency locally and add it to an account in a different country with a different currency. Just because it seems simple, it isn’t easy. Underpinning this system is a technology supported by almost 1,500 development staff. Moreover, to operate in this way has required hundreds of licences across the world. This is all so that a customer receives the same service whether they are transferring sterling into US dollars or Brazilian reals into Indian rupees.

Wise’s system removes Swift from the procedure entirely and with it, considerable time and expense. In 2024, the average cost for a customer to send money through Wise was 0.59%, meaning, for example, a fee of 59p to transfer £100. For a customer transferring through a bank, it would cost around £6. Wise also reports that 60% of transfers are completed immediately (in less than 20 seconds), more than 80% are within an hour and 95% within 24 hours. Just 5% of transactions take longer than a day. Banks take between three and five days.

How does Wise make money?

One way Wise makes money is that it charges a small fee for transferring a sum (pricing starts at 0.33%). However, this has been steadily reduced throughout the history of the company. The CEO and co-founder, Kristo, has stated that he wants currency transfers to be free. One might therefore ask if the company is giving away its service for free, how does it make any money and, more importantly, why bother investing?

Customers with Wise accounts have money deposited with the company. This money earns income for Wise. More money transferred through the company increases the amount of customers’ money held on deposit, which means more profit for Wise. As with fees for transferring money, Wise plans to give as much back to customers as possible, but it can retain enough income from this source to add meaningfully to its profitability. So the bigger Wise becomes the more it earns on customers’ deposits. In turn, it can lower the cost of transferring money between currencies. This is already 90% cheaper than traditional banks, and Wise intends to make this figure 100%.

Jeff Bezos liked to say of other companies “your margin is my opportunity”. What he meant by that was companies that were making money doing traditional activities (like selling books in large, expensively maintained bookshops) could not compete with Amazon. Amazon is built to be the most efficient way of selling to customers imaginable. It reached its position by continually cutting the price of its services to customers, which entrenched its competitive advantage to the point of being insurmountable. There are loud echoes of this strategy in the way Wise operates where it, too, is entrenching its position so thoroughly that it is becoming impossible for incumbents to compete.

Is Wise a valuable investment?

For its first ten years, the company was called TransferWise because it was Wise to use its services to Transfer money. In February 2021, the company dropped “Transfer” and became Wise. The implication is clear. Wise has the opportunity to disrupt far more than just the currency transfer market.

In the past few years, the company has added more services, such as debit cards, to its offering, so that money in a Wise account can be spent as if it were in a bank account. Just as Amazon used book sales as a springboard to disrupt consumers’ commerce, currency transfer is a springboard to much more for Wise.

Yet before the company expands into new areas, there is still massive opportunity in currency transfer. Last year, the company transacted roughly £120 billion for individuals and small businesses, while more than £11 trillion was turned over globally, thus giving the company ample growth opportunity. Wise has three divisions. Two are exciting for investors given the growth possibility, but the third could be a game-changer. The company’s largest division, Personal, serves individuals. The second division, Business, serves small business accounts like small retailers. It was launched a little later but is rapidly growing into a very large market.

Before the third division is explained, consider the following analogy of what Wise has achieved. When it comes to currency transfers, banks are like train companies. They charge you £250 to go from Manchester to London and it takes two hours (if you are lucky). Wise has invented a teleportation device whereby you arrive in London as soon as you set foot in Manchester Piccadilly train station. Moreover, it only charges you £25 for the pleasure and, to top it off, is promising that in future it will be free. How can traditional train companies (banks) compete?

Wise’s Platform represents the third part of the business. Here companies that transact very large amounts of currency can piggyback onto Wise’s infrastructure. Via a process known as white-labelling, companies that offer currency transfers to customers can transact through the Wise infrastructure but the client interface appears to be their own.

In the UK, for example, customers who transfer currency through a Monzo bank account actually do so through Wise. Wise now has 90 banks globally conducting customers’ requests for currency transfers through the Wise platform. Most notably, Standard Chartered, a major multinational bank headquartered and listed in London, recently joined the Wise platform.

The answer to the question above about how a traditional bank can compete with Wise is that they can’t. Instead, banks are increasingly circumventing the outdated Swift system and operating on Wise’s infrastructure. Back to the analogy – train companies have stopped using traditional rail tracks and are now using the teleportation device for their trains.

Wise certainly has the qualities of a business that could become very special and valuable indeed. It is growing rapidly, is already very profitable and most importantly has a visionary CEO. Rather than focusing on how much money Wise is making in 2024, which is largely irrelevant in the long run, consider that Wise is building an entirely new infrastructure for a significant part of global finance. It is hard to gauge what that is worth, but the best guess is that it’s worth a lot more than today’s share price implies. It would be very optimistic to say that Wise could be the first UK $1 trillion company but it is a realistic possibility.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

I can’t help thinking there are some real opportunities coming in the yen. The currency has been extremely weak for a long time. Against the US dollar, it is at lows not seen since before the turn of the century. 

We all know what a rotten currency the pound has been. Inflation has eroded a third of its purchasing power since 2020. A third! Against the constant that is gold, it has lost 90% of its purchasing power since 1999. And yet against the yen, the pound is at seven-year highs, not far off the levels seen before the global financial crisis in 2008. In those days a pound bought you two dollars, instead of the $1.21 it gets you today. 

In terms of trading volume, the yen is the third-most important currency in the world, after the dollar and the euro, accounting for around 17% of global daily foreign exchange (forex) turnover. As that is thought to total $7.5trn, we are talking about approximately $1.3trn of daily trading volume. No small beer. 

Why the yen is so weak

The main reason is that, while other central banks, especially the US Federal Reserve, have raised rates, the Bank of Japan (BoJ) has not. It has ignored rising inflation (perhaps because Japan has had trouble with deflation for so long). Indeed, the BoJ has been creating digital money and buying extraordinary amounts of government bonds with it to cap rates.

The BoJ now owns over half of the Japanese national debt. My mind boggles when I read statistics like that. How can it be possible to print so much money and buy so much debt without apparent consequence? This is the BoJ’s so-called yield curve control. I wish they’d print money and buy me a mansion, or even just a nice car.

Suppressed rates lead to the yen carry trade: borrowing yen at a cheap rate and holding other currencies that pay a better yield. But when the carry trade reverses, as in 2007-2008, it tends to reverse very quickly. This reinforces the yen’s tendency to act as a safe-haven currency: during times of panic, such as we saw in 2008, there is rapid flight to the yen in a rush to unwind the carry trade.

Looking at the long-term dollar-yen exchange rate, the dollar made its low, or the yen its high, depending on how you view things, in late 2011 and 2012. Since then the yen has halved; 50% declines for a major currency are eye-catching. There were also plenty of previous sharp declines. It slumped between 1990 and 1995, between 1998 and 1999, from 2007 to 2011 and in 2015-2016. When that thing moves, it moves.

I’m not going to pretend to be any kind of an expert on Japanese policy, plans or goals, but I ask, at a certain point, will the BoJ step in to shore up the currency? Surely it must. Everything I read tells me it will. If so, at what point?

The 150 yen to the dollar level is one commonly cited number. 150 is where we are now. But I stress this is only a rumour. Investors have inferred from the BoJ’s statement last week that intervention is not imminent and may not be as significant as many hope. Hence last week’s sell-off.

A related question is: how long will so-called yield curve control go on for? Again, I can’t pretend to know the answer. I am struggling to get my head around the fact that it has been able to go on at all, let alone for this long.

Sterling and yen: a volatile pair

In the meantime, consider another highly volatile currency pair: the yen and sterling. This is where I think the money is going to be made. Going back to 1991, the rate has ranged between 255 and 120 yen to the pound.

During the periods of a strong yen, sterling came down like a stone: between 1990 and 1995; from 1998 to 2000; in 2007-2008 and in 2015-2016. The financial crisis saw the pound drop all the way from 250 to 120 to the yen, a 52% plunge. 

These trends also tie in with my eight-year cycle of the pound: it is even more apparent when viewed in yen. As so much of the British economy is built on finance, sterling tends to be strong when financials are strong. It sells off during market panics, which is when money flees to the yen. Thus the pound and the yen are inversely correlated. 

Sterling has been weak against most currencies since the summer. Cable (the name given to the sterling-US dollar exchange rate) has gone from $1.31 to $1.21. The eight-year-cycle in the pound seems to be playing out again. But against the yen it has hardly moved. It’s the same price that it was in June and July, and has been gaining against the yen since Covid. Does this trend continue, or is it exhausted?

Most of the 2020 Covid trades (the boom in technology stocks, in commodities, in bitcoin) have played out and unwound. But not the decline of the yen. That is still going strong. There is some catch-up to be had.

When does it end? That’s the question. There may still be some gas in the tank, but I’m starting to think sooner rather than later – if only because so few people are talking about it. I recently asked three different finance WhatsApp chat groups that I’m on if anyone had any decent yen material. Nobody came back with anything. Such things are often a good, contrarian sign. Nobody rings a bell at the top of the market, unfortunately. But this is one to watch. 

Forex trading is extremely difficult. There is so much that can go wrong, especially to do with risk management, position sizing and timing. I don’t recommend it unless you know what you are doing. But I feel there could be an opportunity here.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

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Foreign exchange trading, or FX trading, sometimes feels like all the rage and a fast route to riches.

But the reality couldn’t be more different. Most so-called retail traders (those of us without millions of pounds to play with) lose money FX trading.

“Ultimately, for someone to be successful in trading any market, but specifically the forex market, you need to have a clear strategy, edge and process,” says Sam North, market analyst at trading platform eToro. “It takes time, patience and a lot of hard work to master but can be fruitful once executed consistently and correctly.”

FX trading is, in the simplest possible sense, the process of buying and selling different currencies in the hopes of making a profit.

There are many different currencies around the world, with varying exchange rates and values.

Some of the most commonly known currencies include the United States dollar (USD), the Euro (EUR), the British pound (GBP), the Japanese yen (JPY), the Chinese yuan (CNY), the Canadian dollar (CAD), the Australian dollar (AUD), the Swiss franc (CHF), and the Indian rupee (INR), among others.

Each currency has its unique symbol and code and is used to facilitate trade and commerce within its respective country or region.

The value of one currency against another is determined by several different factors.

A country's interest rates, economic position, and economic policies all help traders determine the value of a currency against its peers.

However, while these factors do influence the value of the currency over the long term, in the short term – hours and days – the value of a currency is determined by market sentiment and news headlines.

That’s what makes FX trading so challenging. The investment and trading environment can change in the blink of an eye, causing potentially huge losses for traders.

Another reason why FX trading can be so risky is the fact that traders usually have to use leverage.

Traders often employ leverage to increase potential profits. However, this also increases potential losses.

But before I take a deeper look at the risks of borrowing money to trade a volatile asset class, I think I first need to take a step back and explain how currency markets work.

How does FX trading work?  

If you’ve been on holiday, you will know the basics of the FX market. If you want to spend money in another country, you will have to change your funds from pounds sterling into whichever currency it is you want to spend.

If you go to a foreign exchange booth and exchange your pounds sterling for dollars, for example, you are effectively selling sterling to buy dollars – very similar to selling any other good or service.

This is how FX trading works on the global market, although on a much larger scale.

Every day $7.5 trillion of currencies are bought and sold around the world. From individuals transferring money to go on holiday or sending money home to relatives, to private equity companies forking out billions to acquire a business in a different country, the basics of the process are the same.

Foreign currency traders try to make money by buying a currency at one price and hoping to sell it back at a higher price.

For example, if I go on holiday to the US and want some spending money, I would sell my pounds sterling to buy US dollars. At an exchange rate of £1 to $1.20 I could buy $120 with a sum of £100.

If I don’t spend this money, I can change it back when I get home. But currency markets are constantly changing, and that’s where FX trading can be quite profitable.

If the exchange rate moves when I’m away, from $1.20 to $1.18, when I try and sell my dollars back in the UK, they will buy £101.70, a profit of £1.70.

The risks of FX trading

One of the main benefits of currency trading is the potential for high returns. Because currencies are constantly fluctuating in value, traders can profit from the difference between the buying and selling price of a currency pair.

However, it is important to note that currency trading is not without risks. The market can be highly volatile, and traders must be prepared to manage their risk through proper money management and discipline.

On a day-to-day basis, the rate of exchange between one currency and another is nothing more than a reflection of market sentiment. As such, currencies can swing widely in value.

But over the long term exchange rates are determined by multiple macroeconomic factors such as interest rates, economic growth, and a country's debt load.

Foreign currency trading involves trying to capitalise on short-term market movements to make a profit and leverage is usually used to improve returns.

Returning to my holiday example; a profit of £1.70 is far from enough to make a living. A more attractive profit might be more in the region of £1,700, but to earn this I’d have to have sold £100,000 in the first place.

That would be fine if I had the backing of one of the world's biggest banks, but for most, it’s an unattainable starting point.

That’s where leverage comes into play. FX trading platforms usually offer punters leverage to increase profits and losses.

“Leverage allows traders to control large positions with a relatively small amount of capital, potentially magnifying gains from small movements in exchange rates,” says North. “However, this also amplifies risks; losses can exceed the initial investment, leading to substantial financial losses.”

One of the world’s largest trading platforms offers investors leverage of as much as 1:2000. That means for every £1 in an account a trader can play with £2,000. I would only need £50 to trade £100,000.

This is where things can get dangerous. While leverage makes it easier to make money, it also makes it easier to lose money.

Let's say I think the pound is going to fall in value against the dollar. To make money from this trade I would go “short” the pound against the dollar (GBP/USD).

If a trader goes “long” they’re hoping the price will rise. If a trader wants to bet against a currency they will “short” it.

If the exchange rate for the pound against the dollar is $1.20, and I want to go short sterling, I would purchase £1 for $1.20 in the hopes that the dollar appreciates. If it does, I can sell my dollars for pounds and earn a profit on the difference.

By using leverage I can improve my returns.

So, if I use leverage of 1:2000 I can short the pound against the dollar using £100,000 (traded for $120,000) with a deposit of just £50.

However, if the value of the pound against the dollar rose rather than fell I’d have to deal with some steep losses.

If the exchange rate moved from $1.20 to $1.22 and I repurchased my pounds, I would receive £98,361. That would be a loss of £1,639 – not only wiping out my deposit, but also leaving me £1,589 in debt.

Put another way, if a trade goes wrong, you can lose a lot of money very quickly when trying to trade FX.

And the odds are stacked against the average trader.

“Other risks include high volatility, where currency values can fluctuate rapidly due to economic news, political events, or market sentiment,” says North. “Liquidity risks can occur in less traded currency pairs, where there might not be enough market depth to exit positions at desired prices.”

Around two-thirds of retail traders lose money. That means traders only have a 33% chance of success on average. Even this is not guaranteed.

To be successful in currency trading, traders must have a solid understanding of the market and the factors that affect currency prices. It is important to have a trading plan to stick to it, and to be disciplined in managing risk and emotions. Additionally, traders must stay up-to-date on global economic and political developments that may affect the market.

“Forex traders must keep a close eye on the economic calendar, as key data releases can significantly impact market movements,” says North. “They should also understand when trading volume peaks for specific currencies and, over time, determine the periods during which they perform best.”

There are less risky ways of profiting from changes in FX rates over the long term, without the risks involved in short-term leveraged trading.

“One such strategy is carry trade, where investors borrow in a currency with a low interest rate and invest in a currency with a higher interest rate, earning the interest differential,” says North. “This method requires careful consideration of interest rate policies, economic stability, and currency risk but can offer steady returns over time without the daily market noise.

“Another approach involves investing in currency-hedged international equity or bond funds, where the fund manager uses financial instruments to protect against currency fluctuations, thus focusing on the asset's performance rather than currency movement. These strategies require less active management and can be part of a broader, more diversified investment portfolio, providing a way to benefit from currency movements with reduced exposure to short-term market volatility."

How to choose an FX broker 

“Retail traders can get involved in FX trading by opening an account with an online broker,” says North. Before doing so, “traders should first understand the basics of how forex markets work, including the concepts of pips, lots, and margin”.

If you want to get into FX trading, there are some things you should keep in mind when choosing who you trade with:

• Only use a regulated broker. The FCA’s website has a list of those brokers registered with the regulator. The site also has a list of companies that are trading and not regulated. These should be avoided at all costs.
• Never trade with more than you can afford to lose. You’ll likely lose all of your money so go into FX trading prepared for the worst.
• Just because you’re offered leverage it doesn't mean you should use it.
• You must know what you’re doing. The FX trading market is awash with scams and bad actors, that’s without taking into account the risks of trading with borrowed money in the first place.
• Consider the spread - the difference between the buying and selling price of a currency pair. The spread represents the profit margin for the broker, and traders must consider this when entering and exiting trades.
• Trading fees and commissions can eat into profits if not managed properly.

North points out that traders can start out by trading with a virtual account, allowing them to practice without taking any financial risk, and keeping a trade journal while they do so.

“This approach helps in finding one's trading edge, understanding personal risk appetite, and refining trading processes before committing real capital,” he adds.

Recent months have seen some spectacular moves in foreign-exchange (forex) markets. Switzerland's shock decision to abandon its peg to the euro in January saw the Swiss franc surge almost 30% against the euro in a day. And the US dollar has risen 15% over the past six months against a basket of its major trading partners.

So it's no surprise that investors are more worried about how exchange-rate moves can affect their returns and that's driving a mini-boom in funds that hedge their currency exposure.

There's now $60bn invested in currency-hedged exchange-traded funds (ETFs), according to data from BlackRock, the manager of the iShares ETF range, up from just $10bn at the end of 2012. Over $13bn went into these funds in the first two months of this year alone. But does it make sense to hedge your currency exposure, or is it likely to result in lower returns?

Taking a view on currencies

The most obvious reason we might choose to use a currency hedge is because we have a strong opinion on what a currency is likely to do. Imagine that we plan to buy Japanese stocks because we think that the Bank of Japan's quantitative easing (QE) policies will help to boost the stockmarket. However, we also believe that QE will cause the yen to weaken.

So we invest using an exchange-traded fund (ETF) that hedges its yen exposure.Let's assume that the Japanese market then goes up 10%, while the yen weakens 5%. Our currency-hedged investment gives us a return of 10% in sterling terms, while an investor who didn't hedge would only gain 4.5% so deciding to hedge has meant larger profits. Of course, if the market had dropped 10%, while the yen gained 5% instead, we wouldn't have had the benefit of the strong yen trimming our losses so this can work both ways.

The important point here is that we are consciously taking a view on the direction of the currency that the yen will get weaker and we're looking to incorporate that view in our investment decision. Of course, predicting currency movements is more a matter of luck than judgement and we stand a good chance of being wrong. But if we're confident in our forecast, currency hedging here is more consistent with our overall investment view than not hedging. Conversely, if we expected the yen to strengthen for whatever reason, it would be more consistent not to hedge.

Avoiding the unexpected

However, this scenario is quite unusual. We often won't have a strong conviction about the outlook for a specific currency. Yet we know from history that exchange rates can have a large impact on returns over time. For example, from 2002 to 2007, when the pound was strengthening against the dollar, the S&P 500 returned 67% in US dollar terms, but 36% in sterling terms. Over the next five years after the pound peaked, the opposite happened: the S&P 500 lost 3% in US dollar terms, but still showed a profit of 19% in sterling terms. Given that, we might want to hedge simply to reduce the risk of unpredictable losses from currency moves. By doing so, we give up the equally unpredictable possibility of currency gains. And we will incur expenses: currency hedging costs money, even if the impact should be minimised when investing in a fund that can use low-cost ways of hedging. But we may feel that the reduced risk makes this worthwhile.

Whether hedging turns out to be beneficial will only be obvious in hindsight. But a recent paper* by Sanne de Boer of QS Investors (part of US fund group Legg Mason) offers a fairly comprehensive test of the impact over the last few decades. De Boer looked at the outcome from hedging stocks across six currencies between 1979 and 2013. She found that hedging slightly reduced long-term returns, but improved risk-adjusted returns as measured by the Sharpe ratio (returns relative to volatility). This implies that if it's important to protect our capital during times of market turmoil, hedging is the way to go.If we can stomach the ups and downs, choosing not to hedge should give us higher returns.

Selective hedging

However, there are some nuances to this. Hedging all foreign-currency exposure did not always give the best trade-off between risk and return. The ideal hedge ratio varied depending on the investor's home country and the country they were investing in. The more cyclical their currency was meaning the more it tended to rise and fall in line with global stockmarkets the smaller the benefit from currency hedging. That's because exchange-rate movements can provide a natural hedge for countries with cyclical currencies (if our home currency tends to weakens as global stocks fall, it helps cut the losses on our foreign holdings).

So an investor who wants to balance risk and return should hedge selectively. For example, from 2008 to 2013 a UK investor who held equal amounts of the other five countries in the study would have done best by hedging around 60% of their exposure, as the chart above shows. However, that would have consisted of hedging all their Australian and Canadian holdings, most of their European exposure, but almost none of their US positions. A Japanese investor did best hedging almost everything, while an Australian should have done relatively little hedging mostly of other cyclical currencies, such as the Canadian dollar. As the chart illustrates, the optimal hedge ratio changes over time, so the exact numbers may not be a perfect guide to the future. But the broad principle of hedging currencies that are more cyclical than your own seems to be a useful rule of thumb.

*Smart currency hedging for smart beta global equities, Sanne de Boer, October 2014, qsinvestors.com