The Importance of the Market
" Time in the market, not timing the market "
This piece of advice is very relevent to the investor who wishes to time their entry into a fluctuating market at a low point to later sell at the top of the market. For most investors this is almost impossible to achieve with any degree of certainty. This doesn't mean to say, however, that the market should be ignored since it is probably the single-most influential factor in determining the performance of your portfolio. A more useful strategy is to tailor any regular investments to their prospects in the current market and to review holdings periodically - again, giving consideration to the market prospects.
In the short and medium term it is not. However, if an investor takes a longer-term view then the market can be used to make more informed investment decisions. A look at the last 30+ years of the FTSE 100 shows that it has grown inexorably, if a little erratically at times, and its growth has matched the growth in the UK economy (see here).
How can FundView Help?
The rating system we use makes a comparative assessment of the potential return and the risk of loss in the next 12 months for each fund in the database and does so in the context of the current level of the UK stock market. It assesses both the sensitivity of a given fund to changes in the market, and the consistency and level of returns produced by the fund.
When markets are bouyant, ratings will give a better score to funds with a higher proportion of fixed interest assets or whose performance is less dependent on UK stock market growth. When the market is depressed, it will conversely favour those funds that are best placed to take advantage of a recovery.
This contrarian approach of buying when everybody else is selling is not new and has long been advocated by some of the world's most successful investors. FundView gives you the objective data needed to to make investment decisions for your own portfolio.