The Power of Long-Term Investing

 

"In an environment in persistent need of transparency and clear presenting of information, we have looked at our performance in-depth and long-term, and analysed the positive impact of fair pricing.”

We have all heard the hackneyed phrase “pound cost averaging” to describe the continual drip-feed of monies into the market over the long-term – this is the mantra we hear all the time in relation to our savings plans. However, the positive effect of the compounding of returns over the long-term is sometimes overlooked but equally important and something that we believe is worth reviewing more carefully. 

TAM, having run portfolios through thick and thin under the same mandates, has seen quarters of outperformance with a smattering of quarters where we struggled in the short-term against benchmark. We have also noticed that it’s fair game to question our investment managers’ performance. We all know somebody who’s performed better!

The key issues are 1) a common lack of an in-depth understanding of the impact of risk on the performance of portfolios (see our note: ‘Balanced by Name, Balanced by Nature?’), 2) a somewhat short-term approach to measuring returns: bull markets have made us all expectant and demanding investors, and 3) the effect management fees have on long-term returns.

We therefore felt it time to document the accretive long-term returns of TAM’s investment managers and to highlight the power of small incremental investment gains in our portfolios - since their inception, net of management fees. We have looked across all risk levels. The numbers are encouraging and show what we have long known to be true – small but solid incremental long-term gains coupled with a fair pricing structure have a powerful impact on returns and are not to be underestimated.

The results are set out in our latest ebook, and although we note that investments may go down as well as up and that you may not get back what you invested (and would add that we have never sold our investment performance), we think the figures speak for themselves.

 

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