Investors who “sold in May” miss out on the majority of 2014’s best returns

8th September 2014

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Cautious investors who “sold in May and went away” would have missed out on the majority of 2014’s gains says new research.

According to the trade body the Association of Investment Companies (AIC), the average investment trust, or stock-exchange listed fund sector, is up 5%, with the majority of this growth coming during the summer months.

Investors who had taken the money and run in May, would so far have lost out on 4% growth between 30 April and 31 August.

Many of the out-performers over the year-to-date are in a period of recovery after more challenging times. The top performing sector so far this year has been the Country Specialist: Asia Pacific sector, up 18% over the year – with a massive 16% of this achieved between May and August. The category is staging something of a recovery after under-performing the wider investment company sector in three of the past five years.

The Global Emerging Markets sector has also experienced something of a rebound and is up 11% – again the strong performance came between May and August.

In contrast, it has been a tougher time for Western focused sectors. Britain’s benchmark index, the FTSE 100, only achieved 1% growth over the summer and after a strong period of performance, UK Smaller Companies, UK All Companies, European Smaller Companies and Japan are all having a more challenging 2014.

According to the AIC’s figures, the Global Smaller Companies sector is the second top performing sector over the year, up 16%. But in contrast to some of the other top performing sectors over the year, only 4% of this growth came between May and August. Taking third position is the Sector Specialist: Biotechnology & Healthcare sector, up 14%, which again, enjoyed its best returns over the summer months.

Other good performers over the year-to-date, up 11% and thereby more than doubling the performance of the wider investment company sector, was the Asia Pacific Ex Japan sector and the Property Direct: Asia Pacific sector with 6% of this growth between May and August. The Sector Specialist: Infrastructure (Renewable Energy) sector is up 10% over the year, with 6% growth between May and August, alongside the Sector Specialist: Infrastructure sector, up 10%, where 8% was delivered during the past four months.

Annabel Brodie-Smith of the AIC said: “Whilst St Ledger’s Day is still a few days away, it appears that while the City was sleeping over the quiet summer months, the stock market was disproving the ‘sell in May and go away adage’. On the whole, it has been a good summer for investment company performance.

“It is interesting to see that over the year to date, some of the Western focused sectors have experienced a tougher time after a strong run of performance, whilst many Asian and Emerging Markets focused sectors have seen their performance improving. In other words, there’s no telling where the stockmarket may take us. But whilst it’s early days, investors will nevertheless be pleased to see some of the Asian and Global Emerging Markets sectors staging a recovery, especially given more challenging times in recent years. The message, once again, is plain and simple: investors need to keep a diversified portfolio.”

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