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The group of shares – led by Aviva , Imperial Brands and Shell – returned 16.6 % in the three years to 20 February , while the funds ’ average return stood at 15.8 %. However , Laith Khalaf , head of investment analysis at AJ Bell , says that there have been mitigating circumstances , with retail investors enjoying a rare boost in the share prices of their favoured UK stocks after many years in the doldrums . “ The most popular shares held by DIY investors are often a roll call of unglamorous UK-listed companies , and while they may not be setting the world on fire , they do tend to offer a healthy stream of dividends , which may explain their appeal ,” he explains . Khalaf also notes that while there wasn ’ t a huge amount of variance in the results between the most popular funds and most popular shares , the latter showed a far wider dispersion of returns . “ The results , ranging from a positive 55.4 % to a negative 18.6 %, highlight how important diversification is for DIY share traders . Of course , that
99.7 %
- Maximum drawdown in “ small-cap darling ” Gulf Keystone Petroleum
diversification can be by a ‘ core and explore ’ approach , using funds as the diversified core of a portfolio and then adding in shares around the fringes ,” he says .
The only free lunch This view is supported by The Private Office , which describes the natural diversification from broad-based funds , further amplified by holding multiple funds within the client ’ s portfolio . Perera-Slater notes its funds-based portfolios include alternatives , which would also dampen down any volatility that comes with a pure share-based approach . While individual share preferences
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