Private investors beat professional fund managers over the past two years, according to new data, but underperformed since before the pandemic, with both also enduring a painful quarter in terms of performance at the start of 2022.
Over the past two years, the average ISA and SIPP investor, beat professional fund managers by a significant 6.5 percentage points in median average terms, according to an analysis of the performance of portfolios on Interactive Investor (ii) platform.
The average retail investor saw a 39.7% gain over two years to end-March, ii found.
This compared to a 33.2% increase for the average fund manager in the IA Mixed Investment 40-85% sector, which was chosen as it reflects a mix of exposure to shares, bonds and cash, which the average private investor also holds in their portfolio.
Passive investing enthusiasts would most likely point out that this performance is short of what a major index tracker would have delivered, with the FTSE 100 up 41.5%, not to mention the FTSE All-Share index, which climbed 43.2%, the FTSE World Total Return index, which leapt 60.8%, and the 70%-plus for the S&P 500 and Nasdaq.
However, going back 27 months, to the start of the January before the pandemic, the average private investor’s portfolio was up 10.8%, compared to 12.9% for the average fund managers (Mixed Investment 40-85%).
Private investors beat the FTSE 100 and All-Share, both around 7%, but far underperformed a tracker of the FTSE World or S&P 500, which gained around 35% and 46% respectively.
For the first quarter of 2022, the average punter was down 3.6%, compared to professional fund managers at -3.7%, the FTSE World TR at -2%, FTSE 100 at +2.9% and S&P 500 -1.9%.
“Markets don’t go up in a straight line and this [research] is a sobering reminder of that,” said Richard Wilson, ii’s chief executive.
“It’s also a reminder of the importance of taking a long-term view, and not putting all your eggs in any one regional basket. The UK’s comeback over the year to date illustrates that very clearly.”
The research showed the average investor on the ii platform under 65 has at least 10% cash, with proportions of direct equities ranging from 24% (for those aged under 24) up to 43% (for the 65s and older) and a mix of funds and investment trusts making up the rest.