Why Invest in Global Funds?
Investing in global funds offers one of the most effective ways to diversify your portfolio. By spreading your investments across various companies, industries, and geographical regions, you reduce the risk of your portfolio being significantly impacted by a downturn in any one market. This broad-based exposure can help balance out the volatility that individual economies or sectors may experience.
Global Funds’ Performance in 2024
Global equity markets began 2024 on a positive note, with overall returns on the market, as indicated by the MSCI World Index, hitting 9.88% in sterling by the conclusion of the first quarter. The second quarter saw a slowdown in the trend, with returns taming to 2.56% from April through June.
In spite of this, the first half of the year has seen steady development in a number of major economies, which is encouraging for business profits and future market performance. As the year goes on, it’s important to remember that, despite their disturbing nature, market corrections can offer chances for investors. After September, which has always been a poorer month for stocks, we now have to deal with the more infamous month of October. Financial disasters had a long history during this time, including the Wall Street crash of 1929, the banking crash of 1907, and Black Monday in 1987.
Nevertheless, despite the shadows cast by these historical events, market dynamics have changed. According to some analysts, investors with a long-term perspective may be able to take advantage of the recent downturns as buying opportunities.
The Growing Popularity of Global Funds
Global funds have consistently been a favourite among investors, dominating the top-purchased lists at leading stockbrokers. Their global reach and diverse holdings make them an essential component of any balanced portfolio. In fact, within the Investment Association’s Global Funds Sector, there are 562 different funds available, showcasing the depth of options available to investors.
However, not all global funds are created equal. Of those 562 funds, only 60 are managed by Alpha-rated fund managers – a prestigious rating by FE Fund Research that evaluates a manager’s performance across all the funds they have managed. This rating helps investors identify those managers who have demonstrated consistent, long-term success.
The performance gap between the top-performing and the worst-performing global funds is staggering. Over a five-year period, the difference can be as high as 153.14%. This highlights the importance of careful fund selection. To demonstrate this, we’ve analysed a small sample of global funds, comparing their performance over one, three, and five years, along with their associated FE risk ratings.
Avoiding Underperformance
It’s not just private investors who sometimes choose underperforming funds. Our research has shown that even advised portfolios—those managed with professional guidance—can include poor selections. This makes it crucial for all investors to regularly review their portfolios and ensure they are aligned with their goals and risk tolerance.
Get a Free Second Opinion on Your Investment Portfolio
If you’re unsure whether your investment portfolio is truly working for you, or if you’re curious about how well your funds have been performing, now might be the perfect time to seek a second opinion. A fresh perspective from an experienced advisor could reveal opportunities for improvement or highlight risks that you may not have considered.
We’re offering a free, no-obligation second opinion on your investment portfolio. Whether you’re new to investing or have years of experience, our analysis could help you make more informed decisions and optimize your strategy for the future.
Contact us today to arrange your free portfolio review and ensure your investments are on the right track.