How To Fix The Poor Performance Of Your Investments

Updated 7/8/2019.  Too many times, I meet new clients with an existing portfolio of investments that has under-performed.  And sometimes drastically under-performed.

This is especially concerning given the backdrop of generally rising financial markets over many years.

If you're feeling upset because you haven't received the returns you're entitled to, then take action.  

As the phrase goes - if you've worked hard for your money, then you'll want your money to work hard for you too.

Why Hasn't Your Investment Performance Been Up To Scratch?

Here are some common reasons for poor investment returns:

1. Inappropriate Asset Allocation.  Your asset allocation - the relative mix of different types of investments - is crucial and a key determinant of performance.  If you're an adventurous investor but your portfolio is too cautious, you'll get disappointing returns.  If you are a cautious investor but are in volatile investments, you run the risk of unwanted losses when there is a market downturn.

Other common errors with asset allocation include too much 'home bias', and not enough diversification within asset classes.

2. High Management Fees and Hidden Charges of Investment Funds.  A major reason for the growth of interest in passive funds, over many years, is that investors begrudge paying high management fees for performance that doesn't materialise.  Index tracking investments can be a very inexpensive way of gaining broad market access.

And what's worse, it's not uncommon to meet new clients who hold funds that are stealthily paying away a secret commission back to the so-called advisor.

3. Unjustified High Fees of the Investment Platform, Pension Plan, or Tax-Wrapped Account.  It's natural that some international investment platforms will have higher fees than a cheap and cheerful dealing account from the bank.  But clients need to know what those fees are, in a transparent way, so they can make informed decisions as to whether they are receiving good value.

4. Incorrect Currency Strategy.  This is a very common error, and a subject that is widely misunderstood (inside the industry as well as out).  Having an explicit currency strategy is essential for every international investor.

5. Purchase of Expensive Structured Notes.  Structured notes can sometimes, though rarely, deserve a place in your portfolio; but what your advisor won't tell you is what commission they receive from selling them to you.

In general, I see Structured Notes as a sign of a lazy investment strategy - they lock up your cash for a period of years (meaning you can't take advantage of better opportunities when they arise), and returns are sacrificed for the privilege of 'protection' that is better delivered using quality bond and fixed income funds.

6. Poor Service Received from the Financial Advisor.  A properly constructed portfolio shouldn't need much day-to-day attention.  But periodic reviews are essential, to reconfirm the asset allocation, and rebalance holdings when required.  Especially if your portfolio is more adventurous and growth oriented.

If your portfolio hasn't given you the returns you deserve, then it's time for an independent, impartial, and expert analysis, to get you back on track.

Please contact me to request a free, no-obligation review and analysis of your investment portfolio.