One important caveat — this choice effectively exists only with domestically listed ETFs. The moment you buy SPY directly in dollars, you are automatically currency-exposed. That is why "hedge or not" is the most common fork in the road when choosing a US index ETF listed domestically within an ISA or pension account.

* Based on data collected by the site (January to early July 2026). These are intraday values and may differ from the standard exchange rate.

The FX rate moved up more than 4% in the first half of this year alone. For currency-exposed investors, it was a half-year in which FX gains were layered on top of equity gains; for investors "just starting now," on the other hand, it is a situation where one is forced to buy dollars at a historically high rate. This duality is exactly why the hedging debate has flared up again in 2026.

Suppose an index is up +15% over one year. For a currency-exposed investor who exchanged into dollars at 1,540 KRW, the KRW-denominated return splits out as follows depending on the FX rate one year later.

In an extreme case, the index could be up 15%, but the KRW-denominated return could turn negative (last row). Conversely, if the FX rate keeps climbing, FX gains stack on top of index gains, producing +26%. To calculate it with your own buy and sell FX rates, try the calculator below.

A hedge is insurance, and insurance comes with a premium. The backbone of hedge cost is the short-term interest rate differential between Korea and the US. In the recent environment where US rates have stayed higher than Korean rates, KRW hedging via forward contracts has been structurally "negative carry," and as analyzed in the prior FX hedge guide, this has generated a cost of roughly 2% per year (based on interest rate differentials; varies by timing and product).

2% per year may look small, but on a compounded basis it becomes heavy. If the index gains 10% per year, a simple calculation says the hedged version takes about 8% — while over 10 years, the unhedged version (assuming an unchanged FX rate) grows the principal to 2.59×, the hedged version stops at 2.16×. The final amount is about 17% smaller. This is why the common verdict is that "for long-term investing, currency hedging is an expensive form of insurance," and hedged products are typically considered for short- to medium-term funds.

* When the rate gap narrows, hedge cost falls as well. Check the actual cost in the product's fact sheet and your broker's disclosures.

Currency exposure has a less well-known defensive function. Historically, in every global equity crisis (2008 GFC, 2020 COVID, 2022 tightening), the KRW has tended to weaken and the dollar to strengthen. When US stocks fall, the FX rate rises and cushions the KRW-denominated loss — for Korean investors, currency-exposed US stocks essentially carry the character of "equity + crisis insurance."

Adding a hedge also turns off this cushion. In a year when the index drops −30% and the FX rate rises +10%, the unhedged version lands at roughly −23%, while the hedged version takes the full −30% plus the hedge cost. The paradox is that "insurance bought to reduce volatility can amplify losses in the worst year." Of course, this is a tendency rather than a rule, and the opposite combination — a strong KRW combined with falling equities — is entirely possible.

One-line summary — the hedge-or-not decision should be made based on the "investment horizon" of the funds, not on an "FX forecast." Getting the FX direction right is hard even for professionals, and no one predicted in advance the past half-year's move from 1,476 to 1,540 KRW.