The strong U.S. dollar provides an opportunity to enhance returns by selectively holding certain U.S. dollar-denominated assets, according to a Mackenzie Investments whitepaper.
“American companies that conduct a majority of their business domestically stand to benefit most from a rising U.S. dollar. Such companies sell their products and services into an economy that is now strengthening relative to many others around the world.
“They also sell in U.S. dollars, which makes them no more expensive for domestic consumers to buy even though the dollar is rising. In some cases, these companies import their products or components, and these imports become cheaper with a rising dollar. Moreover, such companies are largely untouched by the foreign-exchange risk that multinational companies face when repatriating profits from sales overseas.”
Companies with these features can be found in Utilities, Consumer Staples, Healthcare and Telecommunications.
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