When the going gets tough, it can be difficult to hold your nerve. Yet financial markets often
enjoy their strongest days soon after they’ve suffered their weakest. That’s why it’s important
to resist the impulse to sell your investments after they’ve fallen in value because you’ll miss
out when they recover. Even seasoned investors acknowledge that it’s impossible to time the
markets over short periods. To prove the point, this chart shows how the MSCI World Index
gained 11% over 2020 but lost 25% if you’d missed the 10 best trading days.
The past year has demonstrated the benefits of investing actively. This approach allows
skilled investors to capture the opportunities and navigate the risks when the environment is
changing rapidly. We use a tried and tested process for identifying fund managers that have an
investment edge in their particular area of expertise. We then monitor and assess them over
long time periods and avoid reacting to any short-term periods of underperformance. The
result is that around two-thirds of the funds we’ve selected for portfolios have been in the top
half of performance versus their peer groups since launch and 60% delivered returns that were
in the top half over 2020.
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