Consider this before you fire your investment manager
Analysts advise investors to stick to their strategy and not change funds during periods of poor performance because this usually destroys value
When returns are low, the temptation to switch between unit trust funds is much stronger. But these switches often lead to poorer, rather than improved, performance, data from one of the larger unit trust fund platforms shows. If your fund is delivering a return of 3% a year or less, you are 2.5 times more likely to switch to another fund than if your funds is earning 15% a year or more, according to research done by Momentum Investments. But often it’s the worst thing to do. Paul Nixon, the head of technical marketing and behavioural finance at Momentum Investments, says between 2008 and 2018, the actual returns earned by investors on its platform who switched funds were lower than those they would have earned had they remained with their first fund choices. Investment platforms offer you easy access to a range of funds from different managers and facilitate easy switching between these funds through a single administrator. But easy switching seems to have destroyed value for many ...
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