But BNY Mellon’s Mr McCarthy has noticed a shift from the way intermediaries are investing – and for how long. He says 10 years used to be the norm, then it was seven years down to five, and now three years is the “magic number”. Especially now as vehicles such as ETFs are in the market, and you can have daily trading, the length of investment outlooks has changed.
“There is a part of me that wonders, now we are in a fee-based world, whether there are some advisers out there that feel to justify their fees they need to be a bit more active in the portfolios. I wonder too about the ease at which they can trade funds. The technological improvements platforms have had mean many are now able to offer discretionary technology.
“There is a much greater focus on cost. Advisers in a fee-based world are really having to think about how they can justify that fee to their clients,” Mr McCarthy says.
Whether or not the focus on fees has changed the way advisers invest is yet to be seen. Perhaps in another 10 years, we will know for sure how holding periods have changed. The past few years have been tough on investors, and there is almost no doubt that many would have withdrawn their money from funds because of the state of the markets.
Although 65 per cent of funds failed to return on their initial investments over the year, many groups are seeing positive performances and are going against the odds. An example of this is our winner, BNY Mellon. Although it has suffered some setbacks in emerging markets, its expertise in areas such as Japan and global markets have negated any losses.
This research is by no means scientific, nor a recommendation on choosing a fund, but it does suggest that a balanced portfolio with expertise from various groups remains the best way to invest.
