A situation that we work very closely with clients is that of their investment timeframe. When investing in growth funds and portfolios such as the Sustainable Ethical Allocations, investors need to make sure that they have a suitable timeframe. 

Generally speaking, if investing in shares (growth funds), then investors should be looking at taking an absolute minimum 5 year timeframe before they anticipate that they need to redeem their investments (this is a 5 year timeframe for the sectors, not specifically the individual managed funds).

The Global Financial Crisis that we saw in 2007 through 2008, what we saw again in 2011 and 2012 with the European debt crisis and even in late 2018 with the US v China trade tariff discussions with possibility of a trade war, is why investment timeframe is so important. Edit 31 March 2020 – and now the current situation with covid19.

To give an example, if you had invested in a diversified portfolio (using the FTSE UK Private Investor Growth Index) at the start of June 2008, the value of that investment would have been nearly 32% lower by March 2009. However, investors that maintained the portfolio strategy, recovered those losses around 12 months later. 

Investors that maintained their investment for the recommended 5 years, would have achieved an investment return of 35.5% (average of 6.26%pa). If held for 10 years, the investment return was 104% (7.39%pa) and this is after the initial drop in value of 32%. Edit 30 October 2020 – with the negative impact of covid19, the updated annual performance is currently 6.51%pa)

_{A . FTSE UK Private Investor Growth}

This is why it is important that we structure portfolios so that proceeds that may be needed in the shorter term are placed in more cautious, less volatile assets. Proceeds that will not be required for a period of 5+ years can be invested in equity type investments, and therefore if (when) we do see a downturn in the markets, it provides time for the quality assets to recover before they are actually needed.

Any investors that have queries with the managed funds that they hold or wish to see how those funds would have performed during the same periods, please use the ‘request information’ button.