The majority of investors sit on their funds for years without reviewing performance or even checking whether they still fit their needs. But with £13bn-worth of investors' money sitting in consistently underperforming funds, you must conduct a fund portfolio check a couple of times a year, working out which funds to keep and which to dump.
Investments in funds are different to investments in shares. For a start, funds are not trading opportunities – they are meant to be held for the long term, usually five years or more. So it is tempting to sit on them for years without reviewing their performance or whether they still fit your needs. And that is what the majority of investors do.
Research from Legal & General Investments reveals that over a third (35 per cent) of UK investors never check the performance of their stocks and shares Isa. Even investors who have accumulated large sums in equity Isas (£55,000 or more) exhibit worrying behaviour, with almost a quarter (24 per cent) neglecting to check the performance of their Isa portfolios. Two in five (40 per cent) admit that they don't change the underlying stocks and shares in their Isa, even if the returns are not what they expected.
Inactive Isa investors attribute their behaviour to a long-term investment strategy. Half (50 per cent) of these investors see their Isa as a "long-term investment and do not want to be concerned with short-term fluctuations". But the reality for almost one in 12 investors (8 per cent) is that they simply forget to check performance.
How often should you check performance?
When looking at those who do check the performance of their holdings, Legal & General Investments' research reveals that:
■ 11 per cent check them every day;
■ 32 per cent check them two to three times a year;
■10 per cent only check their investment annually.
Checking fund holdings every day might seem paranoid. But at least once a year is essential and two to three times a year preferable. That is what you would expect a financial adviser to do if you were paying for advice – and you should do it, too.
