“Should I stay or should I go?” What to consider if your investment fund is under-performing

22nd July 2014


Patrick Connolly, certified financial planner at wealth manager Chase de Vere looks at how investors should view the progress of their investments, and explains why he believes certain fund critiques should be viewed with some skepticism…

Far too many people don’t check up on the progress of their investment and pension funds and even for those who do, it can still be difficult for them to understand if their funds are really performing well or badly.

However, for those looking for guidance it could be a mistake to take a list of ‘dog’ funds or other similar lists at face value, especially if they are compiled on the basis of past performance alone. Companies which produce these lists aren’t giving you any specific advice or recommendations. So if you take any action because of these lists, you will be solely responsible if it then goes horribly wrong.

READ MORE: Are you invested in a ‘dog fund’?

Mostly the companies who prepare these lists are trying to get hold of your contact details in the hope they’ll be able to sell you products in the future. Just try to access any of this research without having to give your name, address, phone number and email address.

Patrick Connolly, Chase de Vere

Patrick Connolly, Chase de Vere

Even if you own a fund which seems to be under-performing you shouldn’t automatically get out. You need to understand why it is under-performing and then consider if anything might change to address this in the future.

Some funds under-perform simply because their investment approach or style is out of favour and the risk for investors is that they get out just as performance starts to improve. A double whammy could be that they move to a fund which has performed strongly and is highly recommended, just as it peaks. You also need to remember that if you decide to move to another fund there will be costs involved.

If you are making your own investment decisions you really need to understand what you’re doing. If a fund has performed well you need to know why and likewise if it has performed badly. This will allow you to make informed decisions. If you don’t really understand what you’re doing or if you haven’t got the time to thoroughly research and monitor your investments, then you should look to take independent financial advice.

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