The reason behind this is that fund performance varies, depending on what is affecting the underlying assets. These include how the economy is doing, market sentiment and sectors it chooses or avoids.
The manager’s style, too, will come in and out of favour. Some managers like to pick out-of-favour companies and wait for the business to be turned around; others like stocks which pay a steady dividend for a reliable income stream. So, if you pick a fund that has been a top performer for the past five years, it may be due a change in fortune.
When I am advising clients, I tend to look at what to recommend by using a different method than pure past performance. Clearly, I am not going to pick poor performers thinking that they will be due an upturn. The starting point must be an appreciation that, to get the best benefit, the investment is for the long term. We are not looking for quick fixes but to take advantage of market fluctuations. Therefore, picking funds is based on what I believe in for the long term.
What I am also looking for is diversity, using the investment profile that the client completes allows me to choose funds suitable for them in different sectors, regions and assets. This allows for a more temperate approach as there will be checks and balances within the portfolio as funds rise and fall. The adage that, it’s not timing the market, but time in the market, to get good returns still holds true. If you haven’t reviewed your investments for some time I am happy to arrange to see you to discuss what, if any, changes I would recommend.
So, you’re wondering – what is ‘robo-advice’? There is a growing market in the UK of online offerings where, instead of going for a consultation with a financial adviser, you use a questionnaire devised by the provider which, depending on your responses, advises you where best to put your cash. Investors are placed in a broad investment strategy that, in theory, suits their objectives and attitude to risk. These strategies largely consist of passive investments which ‘track’ an index.
On March 8, Phillip Hammond delivered the Spring Budget 2017. Among those most affected by the changes – which included the self-employed – were those who wish to set up Qualifying Recognised Overseas Pension Schemes (QROPS). Here is a brief overview of how the Budget 2017 has affected QROPS and what it may mean for you.