Take a long term view with M&GWhen times are worrying it can be tempting to postpone new investments, even to sell existing holdings or maybe try to switch to the latest winner. But that may mean losing sight of the reasons for investing in the first place. Ultimately we believe that investors should make their decisions with the long term in mind.
In our view, the best returns are earned by companies with clear corporate strategies, strong finances and hard-to-replicate assets. Above all, they have experienced and talented management. So we look for companies with the best management, with sound plans, who we trust to see those plans through.
At M&G we invest in companies, not share prices. We are not interested in chasing ‘hot stocks’ or market fashions – to our mind, that can be a dangerous, and costly, game. All businesses go through good and bad times – even the best suffer dips in their fortunes from time to time. As shareholders, provided our investment case remains intact, we are very happy to support companies through those times. And that means taking a long-term approach.
Investors in funds also need a plan – what they expect of the funds they hold and the timeframe needed to achieve these goals. Armed with that plan, investors can ignore the ‘noise’, remain firm in their conviction and continue to focus on the long term for their investments.
Postponing new investments until the markets make an up-turn can mean missing out on some of the ‘best days’ for investments. Investors who hold resolute to a long-term plan could avoid mistiming the market as it recovers.
Find Out More About Time Not Timing (217 KB)*
We generally recommend that equity investment should be taken with the long term in mind. We believe the historic pattern of equity returns is compelling – the longer an equity investment has been held, the less likely it has been to lose money and the more likely to make money.
Over the last 20 years:
• UK equities have returned 9.8% per annum
• Global equities 7.8% per annum
• Both well ahead of the 3.3% earned by cash over the same period.
Source: Datastream, Morningstar and M&G Statistics 31st August 88 to 29th August 08, income reinvested
Find Out More About Long Term Equity Returns (966 KB)*
Of course the past is no guide to the future for equity investment and in a bank or building society deposits are guaranteed up to £50,000**, unlike investments in the stock market where you may not get back the amount you originally invested.
These examples have been used to demonstrate the impact of long term equity investing based on stock market information; they may not match the experiences on investing into specific funds.
Another effective way to reduce the risk of short-term volatility is to invest regularly on a monthly basis. Drip-feeding money into the market over time can have two benefits. Firstly, it lowers the average cost of shares purchased over the long-term and secondly it ensures that investors don’t run the risk of picking the wrong time to make a single lump sum investment decision.
Find Out More About The Benefits Of Regular Investing (154 KB)*
Our scale and experience in all key asset classes and our extensive range of funds is designed to provide attractive investment options to meet the needs of all our investors. This is one of the reasons M&G were awarded Best Global Group in the Investment Week Awards 2008.
We offer products covering a wide range of asset classes such as equities, fixed interest and commercial property, across diverse global mandates which include the UK, Europe, Asia and the Americas. Our fund managers are experienced investment specialists who have the freedom to think independently and develop their own individual, rigorous investment approaches and back their convictions to achieve the best possible outcome for their investors.
Find Out More About M&G’s Range of Funds
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**Source: Financial Services Compensation Scheme as at 7 October 2008.
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