Choosing the reporting currency: CHF, EUR or USD?

Short answer

The reporting currency should be the currency in which the family meets its living costs and obligations – in Switzerland usually CHF, in Germany and Austria EUR. Positions remain recorded in their original currency and are converted at the closing rate of the reporting date. Good reporting separates performance in local currency from the currency effect, so that investment and currency decisions can be judged separately.

Why the choice matters

The reporting currency determines how return and risk are perceived. A US equity portfolio can have gained in USD and lost in CHF. Measuring in the wrong currency means taking decisions on a distorted basis – for example because currency losses appear as investment losses, or the other way round.

Criteria for the choice

• The currency of the family's living costs and main obligations.
• The currency in which tax is assessed in the state of residence.
• For internationally dispersed families: one currency per family branch rather than one for everyone.
• A separate currency can make sense for individual structures, such as USD for a company holding US real estate.

Converting correctly

1. Record every position in its original currency and keep it there.
2. Convert holdings at the rate of the reporting date.
3. Convert inflows and outflows at the rate of the transaction date.
4. Define the rate source and time and apply them consistently.
5. Flag missing rates as a data gap instead of silently using old values.

Showing the currency effect

Put simply, the total return in reporting currency consists of the return in local currency and the change in the exchange rate. Splitting it into these two components shows whether the asset manager did a good job and what influence the currency had. For decisions on hedging, this separation is indispensable.

Whether and how far foreign currencies are hedged is an investment decision that has costs. Reporting provides the basis for it, but does not replace advice.

Changing the reporting currency

If a family relocates, or the next generation's lives are centred elsewhere, a change can make sense. Historical values should then be recalculated in the new currency so that time series remain comparable. A break in the time series without explanation otherwise leads to misinterpretation.

For families spread across Switzerland, the euro area and the United States, a common solution is a consolidated view in one currency for the whole family plus a view per family branch in its own currency – both derived from the same positions in their original currencies.

In FLIORE

In FLIORE every position keeps its original currency. The reporting currency can be chosen per organisation or mandate; net worth, allocation and performance are converted with maintained rates and adjust immediately when the currency is changed. Missing rates are flagged by the data quality check.

At a glance

Frequently asked questions

Sources

• Global Investment Performance Standards (GIPS) – CFA Institute
• European Central Bank – euro foreign exchange reference rates
• Swiss National Bank – exchange rates

This page provides orientation and does not replace legal or tax advice. The cited legal sources in their applicable version are authoritative.

Read more

More on Wealth & reporting

• Precious metals in a family office: custody, valuation, reporting
• Visualising the wealth structure: the structure chart
• Stress testing family wealth
• The investment process in a family office: from idea to monitoring