How young investors are less patient with funds than their elders
Younger investors appear to be less patient than their elders, according the findings of a global survey of more than 5,000.
Legg Mason’s 2016 Global Investment Study found that 38 per cent of UK investors will give an underperforming fund more than 12 months to turn things around.
Of those aged over 40 in the UK, 62 per cent would sell a fund within 12 months of it starting to underperform.
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Those aged between 18 and 39 appeared less patient, with 14 per cent prepared to hold an underperforming fund for more than a year.
Some 35 per cent of younger UK investors would hold out for between one and three months.
Legg Mason also found younger UK investors were more intolerant than their global peers, 21 per cent of whom would give an underperformer a year or more.
The study suggested both age groups in the UK show more patience in the face of market volatility. Older investors said they would tolerate a 16.7 per cent decline in equities before re-evaluating their stocks allocation and an 18.6 per cent fall before selling.
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The younger generation were more likely to hold their nerve, with an evaluation at 20.3 per cent and a sale after a drop of 23.3 per cent.
Adam Gent, head of UK sales at Legg Mason, said: “The survey reveals an interesting dichotomy between investors’ attitude to market falls and their approach to funds that underperform in the short-to-medium term. On one hand, investors seem willing to tolerate reasonably steep market declines before re-evaluating their equity exposure, but only a third will give a fund a year to turn performance around, and 44 per cent just six months.”