Trustnet Magazine 59 February 2020

Cover story 8 / 9 Timing the market Fund managers will often build up their exposure to more defensive assets if they are worried markets are looking toppy and will pile into equities if they think we could be at the start of a bull run. However, Richard Morley, senior investment manager at Brewin Dolphin, says that when private investors try to time the market, they invariably get it wrong. “No one has the foresight to predict every market movement, so leaving your portfolio intact during short- term corrections is vital to benefit from any recovery,” he explains. “When markets fall, there are the inevitable conversations with retail clients who want to sell up, which can be the wrong thing to do. “Even if it puts their mind at ease, in my experience it is rare that they will ever put that money back into their portfolio, as it never seems a ‘good’ time to reinvest. Making knee-jerk reactions will ultimately erode your returns.” Research from Claverhouse IT shows that missing the 10 best days of the FTSE All Share index between 2009 and TRUSTNET 2018 would have turned an annualised return of 5.1 per cent into just 1.7 per cent; missing the best 30 days would have turned this figure negative. Yet even getting your market timing right is no guarantee of making money. A recent study from Fidelity showed someone who made regular contributions totalling £60,000 into the FTSE All Share over the past 30 years would have made £22,561 more than someone who waited for the market to bottom out in each of the six biggest crashes over this time. Mosaic Portfolios To minimise risk, we leave no stone unturned The new Mosaic Portfolio range from FE Investments delivers a choice of solutions to match your clients’ risk proﬁles. Carefully crafted using a selection of holdings – or ‘tiles’ – across asset classes, they are designed to maximise diversiﬁcation and protect your clients’ wealth. Find out more at fefundinfo.com/en-gb/mosaic Capital at risk. For ﬁnancial advisers only. FE Investments is a trading name of Financial Express Investments Limited, which is authorised and regulated by the Financial Conduct Authority. © FE 2019 Financial Express Investments Limited, 3rd Floor, Hollywood House, Church Street East, Woking, Surrey GU21 6HJ. 0207 534 7628

Trustnet Magazine 59 February 2020 | Page 8