Investors rewarded for holding their nerve through financial crisis

Those who kept their money invested through the global financial crisis have made significant gains

Investors who held their nerve during the financial crisis have been well-rewarded. Analysis by Aegon shows those who kept their money invested throughout the turbulence would be up by 89 per cent today.

The Aegon research looked at the performance of a typical mixed investment fund containing equities, gilts, bonds and cash.

While the turmoil brought by the global financial crisis would have caused the value of investors’ money to plunge by 22 per cent in the six months to March 2009, a sustained recovery in the subsequent years would have generated significant returns.

Those who had £100,000 invested in a mixed asset fund would therefore have seen their money grow to £189,000 today.

But not all investors would have stayed the course. Some 53 per cent of those surveyed by Aegon say that fear of another financial crash affects the amount of risk they are willing to take.

Nick Dixon, investment director at Aegon, says: ‘When markets start to wobble, many people’s first thought is to sell, but this natural instinct is typically the worst course of action. By staying invested, you avoid selling assets at depressed prices and benefit from the subsequent recovery.’

Those who picked the most successful investments could have seen their money grow even more. The FTSE 100 index has climbed 104 per cent in the 10 years since the financial crisis, and the FTSE 250 is up by 206 per cent. Thus £100,000 invested in a FTSE 250 tracker over that period would have grown to £306,440.
The top-performing fund over that time, however, is Legg Mason Japan Equity, which has returned an incredible 682 per cent, followed by Axa Framlington Global Technology, which is up 543 per cent.

But the worst-performing funds would have lost you money over the past decade. MFM Junior Oils is down 48.3 per cent and Aviva European Property by 33.5 per cent.

Dixon adds: ‘Trying to time a rebound in stock markets is notoriously difficult and most people will be better riding out the storm – particularly if their savings goal is decades away, as is typically the case when saving for retirement.’

 

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