Investors are better off holding cash during flat markets than in 97 per cent of funds in the UK all companies sector, says Bates Investment Services.
The firm's research reveals that just eight out of 268 funds in the IMA UK all companies sector produced positive returns and delivered the equivalent of 5 per cent a year compound during four flat stockmarket periods. The 5 per cent level was set as a target that the funds had to beat bec-ause this is what investment in a cash deposit would have achieved.
A study of the IMA UK equity income sector reveals that only eight out of 77 funds have beaten cash.
Bates' survey results were based on January 5, 2004 to August 27, 2004; July 8, 2002 to January 5, 2004; September 25, 2001 to July 8, 2002 and October 9, 1998 to September 25, 2001.
Investment manager James Dalby says: “These results are really eye-opening and show that instead of investing in a lot of these funds, people would have been better off holding cash.”
Legal & General investments PR manager Mike Connolly says: “You can choose any periods and draw a series of conclusions from it. We advise our customers that investing is a long-term issue and that you should stick with a fund for at least five years. The stockmarket has always grown over the longer term.”