What advice would you give about selling funds or switching to better performing ones?

30 January 2023

Question by Helen

Hi there, I’d like to ask what is an effective strategy for dealing with 2 funds that are performing very poorly compared with other funds in the same sector (Europe excluding UK)? They are down between 30-40%. What advice would you give about selling funds or switching to better performing ones?


Answered by

Hi Helen

Thank you for your question. You've done the right comparison in looking at the funds peers - mostly clients just say 'it's fallen' or 'it's gone up' without reference to what other funds in their sector have done.

I would definitely switch it into a better fund. When I'm selecting funds for a client I look at the discrete performance over each of the last five years and look for something that has performed at 'above average' in every year - it's no good being the best one year and the worst the next - we want good consistent performance.

However, one point that I would make is how do you know that Europe excluding UK is the right sector? Are all of your funds in this sector? If you do have a spread of other sectors, do you have a strategy for reviewing when to reduce or increase exposure? I'm a big fan of a multi asset fund which spreads your investment between different asset types and geographical sectors. The fund manager will have responsibility for deciding how much to allocate into each sector and will make tactical changes to keep up with economic news and trends.

I hope this helps but do feel free to contact me directly
Rachel