Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

11622

Lipper report examines IMA sector returns

RELATED TOPICS​

Lipper’s latest analysis, Sector Averages: The Yo-Yo Effect report, examines the average returns of IMA sectors over the past 30 years and assesses how the best and worst performing sectors have fared in subsequent years. 

According to the report, the IMA sector that has the best average one year return in each of the past 30 years on average ranks fifteenth in the subsequent year. The most common subsequent rank is fifth (which occurs three times).
 
When the same approach is taken with the bottom-ranked IMA sector each year, on average the subsequent rank is 16th. The most common subsequent rank is sixth (which occurs four times).
 
So the variability in the ranking of IMA sector returns over the past 30 years is such that the average ranking is close to the mid point whether one chooses the top, bottom or middle sector from the previous year. The research also shows how this varies when looking at different time periods.
                      
If an investor had chosen the top sector based on one year returns then, on average, holding that investment for three or five years has been a more successful approach than picking the previous worst sector. By contrast, picking a fund based on the sector average over the past three or five years and holding it for just one year reveals that investors would typically have been better off picking the worst sector.
 
Ed Moisson, Lipper’s head of UK research and author of the report, says: “This research illustrates the hazards of relying too much on sectors that previously offered the best returns. This over-reliance on past sector returns are applicable for investors in both index trackers and actively managed funds. The former because there is no escape from investors’ asset allocation decisions and the latter because even good managers are still often beholden to the prevailing winds that may buffet a sector.”

Latest News

Confidence in the continuing strength of bitcoin and Ethereum is driving wider interest in altcoins..
Discretionary fund manager ebi Portfolios, and asset manager Amundi have launched the SRI portfolio range,..
Regulatory and compliance issues are the most significant barriers to investment in private debt, according..

Related Articles

n response to the increased attention to climate change risk, institutional investors, asset managers, and asset owners in the US are committed to implementing a variety of measures to address climate change and reach their net-zero goals, according to Cerulli Associates...
n response to the increased attention to climate change risk, institutional investors, asset managers, and asset owners in the US..
Lord Hollick, House of Lords
A House of Lords committee has raised “significant concerns” over the role of UK regulators, their ability to operate with genuine independence from government and how they are held to account...
A House of Lords committee has raised “significant concerns” over the role of UK regulators, their ability to operate with..
Rob Edwards, Morningstar
The complexities of assessing performance from responsible investment strategies have been laid bare after Morningstar’s ESG indices delivered a mixed bag in 2023...
The complexities of assessing performance from responsible investment strategies have been laid bare after Morningstar’s ESG indices delivered a mixed..
David Vieira, JTC Group
Investment trusts are the latest sector of the financial services industry to come under fire for failing to cater adequately for responsible investors...
Investment trusts are the latest sector of the financial services industry to come under fire for failing to cater adequately..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by