Why does trying to “time the market” so often fail?Ben Raven - Director
Had you invested in the FTSE All Share Index at the start of 1997, and held your investment for 20 years, you would have celebrated New Years Eve 2016 with a profit of +268%. An average annual return of approximately 5%, compounded over a quarter of a century. Few, if any, would be disappointed with that return whatever their risk appetite.
I have previously explained the punitive, and hidden, charges involved in running an active mandate (see previous blog “Active Funds; why does nobody mention trading charges?”). Charges make life extremely challenging for an active manager, but there are still those whose funds can absorb them and achieve alpha. The questions are just how good do they have to be, and does that represent a sound investment?
Timing the market consistently over a long time-frame is practically impossible and attempting to do so can detrimentally impact the returns on offer.
In order to maximise one’s long-term investment return there is a compelling argument for populating a portfolio with long-only index-tracking, or Exchange Traded Funds (ETFs).
Assuming the portfolio is well diversified, managed daily and structured in the most cost and tax efficient manner, investors can remain invested 100% of the time and reap the benefits on offer.
Conversely if you had just sat tight your initial stake would have almost quadrupled! Markets can bounce back very quickly after a sell off and remaining fully invested can lead to significantly better performance over the long run.
Tavistock Wealth Limited is authorised and regulated by the Financial Conduct Authority and is a wholly owned subsidiary of Tavistock Investments Plc.
The coronavirus has brought economic activity to a virtual stand-still and transformed a strong global economy, with lots of debt, to a weak economy… with lots of debt.
Last week, we considered the debt story behind the coronavirus. The fear of a large debt overhang, as the economy slows, led to concern that households and companies could start to default on their debt.
Our Chief Investment Officer Christopher Peel joined CNBC to discuss his views on market volatility as a direct result of the coronavirus pandemic.
In the past three weeks, global equity markets have fallen almost as much as in the Financial Crisis of 2007-08.
In the past week, global equity markets have fallen again and yields on developed market government bonds have collapsed even further.
Today, global equity markets have fallen again and yields on developed market government bonds have collapsed even further. In my opinion, there are two diametrically opposed events playing out at the same time.
This is a time to remain calm, patient and focused on fundamentals whilst relying on sound risk management practices. Over the last week the number of confirmed cases of COVID-19 has risen to more than 83,000 people across 50 countries.
Ironically, the turning point may have been President Trump’s withdrawal from the Paris Agreement on climate change in 2017 that set the tidal wave of “doing the right thing” in motion.
2019 was the year in which ESG investing joined the mainstream and became the “new normal”.
Environmental, social and governance (ESG), a byword for sustainability, has in recent weeks occupied rarefied real estate on the landing page of several finance industry titans.
Welcome to the Q1-2020 ‘Quarterly Perspectives’ publication, which aims to explain our outlook for financial markets over the rest of the year.
The Dawn of a New Era for UK’s Economy.