Should I sell a fund that’s underperforming?

I’ve got a fund in my ISA that’s been going down for over a year but everything else seems to be doing better. Is it time to ditch it or should I hold my nerve?

Hi Amir,

If your ISA fund’s been going nowhere while others are flying, don’t panic - sideways movement isn’t always a red flag. It could be in a sector that’s temporarily out of favour, or built for stability rather than sizzle.

If you’re investing long-term and the fund still fits your goals, holding tight might be wise. But if it’s consistently underperforming its benchmarkThe standard against which an investment is measured in order to judge its relative performance, asset allocation or risk. It’s usually an index or fund that is used as a point of comparison for investments made up of similar assets., or you’ve lost faith in the strategy, it might be time to switch. Just make sure any new fund improves your diversificationThe process of spreading your investment portfolio across different asset classes, such as partially in shares and partially in bonds, in order to reduce risk..

Smart investors review regularly, diversify broadly, and resist knee-jerk reactions. Time in the market beats timing it. So unless your fund’s truly gone off-piste, staying the course could pay off.

Hope this helps!