Past performance is no guarantee of future performance.
This is a familiar line used by Financial Advisors to make it clear that just because an investment has done well in the past, it doesn’t mean the track record is sure to continue.
The sentiment is particularly relevant this week given that a number of the football teams that were proposing to join the recently announced (and now defunct) European Super League have been the absolute embodiment of the phrase over recent years. A cynic would argue that there is an element of the proposal that was designed to compensate for the fact that some of the historical powerhouses are struggling to maintain the performance that their fan base (and owner) expects. But as an Australian, that’s about the limit of my football commentary.
The only certainty is change
Whether it’s the ebb and flow of football success or investment manager performance, it’s vitally important to understand that things change. This is why selecting an investment portfolio is never a set and forget proposition. Like sports, many professional investment managers go through periods of outperformance, where they appear to have a golden touch and can do no wrong. Articles are written, awards are won and investors pour money in. In most cases, this can’t continue indefinitely.
Construction of a robust investment portfolio is a task that never ends and is, to coin a phrase, a full time job. It’s why we have a dedicated Investment Team at Irwin Mitchell for our clients’ money. What constitutes the best investments decisions today are almost certain not to hold true in 10, 5 or even 1 years’ time.
This is particularly relevant in the current era. Billion pound tech companies appear out of nowhere, companies merge and change ownership faster than ever before, technology is creating new industries all the time and social and political issues such as climate change and diversity crossover into the financial world.
An investors work is never done
In order to make the most out of your long term financial position, it’s important to ensure your investment portfolio remains appropriate. From asset allocation to individual asset selection, constant monitoring and adaptation is needed.
There are a number of ways to achieve this. A DIY investor with sufficient time and resources can conduct thorough, ongoing research to ensure their portfolio remains appropriate, or it can be outsourced to a professional. Fees are always a hot topic in investment circles, but like many other costs in our life, it’s simply a payment for expert service and advice.
Paying to have someone manage your money on your behalf means someone else is doing all of the heavy lifting to maximise your portfolio value over the long term, and the pressure is on them to deliver. Much like a football manager, an investment manager needs to provide value to investors, or else they risk getting sacked.
The important thing to remember is that when it comes to your own investment portfolio, you shouldn’t allow any investment manager guaranteed entry for life.
If you’d like to discuss your investment needs, get in touch with me on 07775 547 205 or email@example.com for a no cost, no obligation discussion.
The information given and opinions expressed are subject to change and should not be interpreted as investment advice. All data is sourced by IM Asset Management Limited unless otherwise stated. All financial and wealth management services are provided by IM Asset Management Limited which is regulated by the Financial Conduct Authority (FCA), FCA Firm Reference Number 402770.