Why does my investment portfolio not move when the markets move?
A frustration experienced by many investors, the markets rally followed by multiple media outlets reporting the global markets have had their biggest gains in months, you log in the following day with excitement only to be faced with a valuation that has hardly moved at all. Why is this?
Let us try to explain, most investors whether it be investing in pensions or ISAs will likely have some exposure to investments funds. These are managed by a Fund Manager who must report the value of their fund by twelve noon in most cases, trying to nail down when these update feeds through to client portfolio valuations can be an impossible task, our best guess is somewhere between 1.5 to 2 trading days later. We also know that these fund value updates do not always occur when they should.
However, it is not that simple, it also depends on the time-period when the significant market movement occurred which thus in turn affects your investment portfolio fund valuation, you will also need to consider the geographical location of the investment fund.
Imagine the markets rallied on Thursday morning, there is a good chance that this would not show the following day when checking your online portfolio account, but logging in on a Saturday morning a few days later, you are likely to see these changes. If the markets were flat on a Thursday morning and rallied on Thursday afternoon after the Wall Street open for example, then this would not be reported until twelve noon on Friday and you potentially would not see this feed through to your investment portfolio valuation until as late as Tuesday morning after the overnight update on Monday evening.
Now the same goes for losses, the markets tumble due to some geopolitical event wiping 3% off the stock markets, following a sleepless night you nervously access your online investment portfolio account to be pleasantly surprised, relieved that the drop you feared was not that bad and you get on with your week. The reality is the losses have not fed through to your fund valuations and the real hit to your investments is another 24 hours away, now add on a few days of market recovery following the recent downturn at 1.5% gain per day, you log into your online account once more, and you guessed it, the 3% market downturn that occurred a few days ago is now showing on your investment portfolio but not the two days of gains, all you are left with is a mix of anxiety and dread.
The swings of emotion in the above scenario are typically experienced by investors who check their investments daily and it really is not healthy, to avoid this emotional roller coaster, it is best to take a longer term view, after all do you check your house value daily, if it went down in value would you sell?
There are many advisers that do not check the markets daily, but I assure you we do, David Woodward who heads up our investments, trades millions every day including his own money and knows the market movements like a heartbeat. This goes a long way to understanding the ebbs and flows of the market and he reacts quickly for clients if required, this means he can react many hours if not days ahead of the competition, as explained above what is an investors see is market movements nearly two days after they have occurred.
David is also a stockbroker, meaning for those investors that seek more real-time investment portfolio exposure we can help.