What to Know Before Moving Assets Abroad

The United States has long been a magnet for investors, thanks to its robust capital markets, innovative companies, and the US dollar’s status as a reserve currency. Yet despite its reputation for stability and growth, recent volatility in US safe-haven assets—coupled with geopolitical tensions and high equity valuations—have sparked a shift in sentiment.

Some investors have recently questioned US exceptionalism and are considering moving at least a portion of their assets abroad. Before you do so, it pays to examine three key risks: currency, geography, and jurisdiction. Understanding these factors can help you make better-informed decisions about global diversification in uncertain times.

How to Align Currency Exposure

Currency risk arises when the US dollar loses value, reducing global purchasing power. To manage this risk, it’s wise to align your financial accounts with the currencies you frequently use. In simplistic terms, if you spend 60% of your time in the US and 40% in Europe—with expenses and liabilities in both regions—you should roughly aim for a 60% USD and 40% euro split in your accounts.

Consider Betty and James, US citizens living in Nashville, TN with a US operating business and vacation home in Portugal. Betty, the CEO, and James, who manages their nearly $200M in family assets, are both in their mid-60s. As Betty considers retirement, they’d like to spend more time in Portugal and might even relocate there in five years.

Currently, the couple is anchored in the United States and primarily deals in US dollars. While they occasionally exchange USD for their Portugal property expenses and travel, their daily life is not affected by currency fluctuations. Of course, if the dollar weakens, foreign goods could become more expensive in dollar terms, as will the cost of maintaining their Portugal home. To prepare, Betty and James should keep most of their assets in USD-denominated accounts but could open a euro account to cover the costs of their vacation home more efficiently.

If the pair relocate to Portugal, maintaining most of their accounts in USD could expose them to direct currency risk. A weaker dollar would mean their USD assets lose value when converted to euros. While this hasn’t been a major issue over the past 15 years, the USD has recently dropped about 10% against a basket of foreign currencies.^[i] This recent trend makes currency considerations more relevant for truly global investors. Strategically, if the couple’s spending and liabilities shift from dollars to euro, their asset management should reflect that change.

Should You Hedge Your Portfolio?

Deciding when to hedge currency exposure back to the base currency is also key. Our research shows that hedging in global fixed-income portfolios can significantly reduce risk without impacting returns, enhancing bonds’ role in preserving capital.

What about hedging the equity portion of your portfolio? Hedging equities can have mixed results depending on your base currency. For USD investors, the cost of hedging non-USD equities often outweighs the small benefit, making it generally inadvisable. On the other hand, euro and British pound investors might benefit from USD exposure, but hedging about 50%–80% of foreign currency exposure back to their base currency has been shown to improve risk-adjusted returns.

How to Manage Geographic Risk in Your Portfolio

Currency risk isn’t the only concern when moving assets abroad. Geographic risk matters too. To manage it, align your investment portfolio with your worldview and financial goals. Take Betty and James, for example. They have an aggressive growth objective for assets intended for their children but worry about slowing US growth dampening their appreciation potential. We suggest diversifying with growth-oriented domestic equities, private market investments, and non-US stocks and bonds to generate compelling returns while addressing concerns about the long-term US growth outlook.

Diversification across asset classes, regions, sectors, and companies helps manage geographic risk without needing to move assets offshore or avoid US investments altogether. Geographic diversification becomes particularly salient in times of heightened uncertainty, as shown when non-US equities outperformed US equities by 12.1% in the first half of 2025.^[ii]

There’s no one-size-fits-all approach to building a portfolio. But staying invested for the long term is time-honored advice. Aligning your portfolio with your worldview helps you stay committed during volatile periods. It’s also wise to avoid overconcentrating assets in a single country or currency, especially for investors with global financial obligations.

Jurisdiction Diversification: Protecting Your Assets Globally

The final piece in this framework is jurisdiction diversification or holding assets in different legal jurisdictions. This may reassure investors who are worried about lax regulations leading to economic fallout (like the 2023 banking crisis). It also offers some asset protection, as US courts may not have authority over accounts established in other countries.

For Betty and James, who have a home in Portugal and plan to spend more time there, opening a Portuguese bank account makes sense. If they’re feeling uneasy about the legal and regulatory frameworks in the US and Portugal, they might consider opening an account elsewhere.

Where should they look? Ideally, they’d choose a jurisdiction with friendly US relations, minimal foreign exchange controls, and strict privacy and asset protection laws. Political and economic stability, along with a regulatory framework that curbs excessive institutional risk-taking, also factor in.

US Tax Compliance for Offshore Holdings

Of course, Betty and James must stay abreast of their US tax and reporting requirements. As US citizens, they owe taxes on their worldwide income and might also face taxes in a foreign jurisdiction on income earned there. To avoid double taxation, the couple should consult their tax advisors about using foreign tax credits or tax treaties.

When it comes to investments, they’ll need careful structuring for US tax purposes. Investing in foreign mutual funds, ETFs, or money market funds may trigger the Passive Foreign Investment Company (PFIC) rules, leading to annual reporting obligations, as well as a punitive anti-deferral tax regime.

What’s more, the couple should be aware of certain reporting requirements. For example, they’re likely required to report foreign assets—including bank accounts, brokerage accounts, and mutual funds—to the Treasury Department each year. Failure to do so could result in civil or criminal penalties. It’s essential for the couple to work with knowledgeable advisors who understand these nuances to ensure ongoing compliance with all regulations.

Diversify with Precision

US investors have several options for diversification, depending on their specific risk concerns. We suggest bucketing risks into three areas: currency, geography, and jurisdiction. Before converting dollars to other currencies, make sure your assets and liabilities are well matched. If you’re worried about the outlook for the US, consider branching out geographically in your asset allocation. Finally, concerns about asset safety under the US legal and regulatory framework require thoughtful navigation of tax and reporting challenges. Above all, before moving assets abroad, partner with professional advisors who are familiar with various financial, legal, and tax issues in order to execute a sound investment strategy.