Bringing you live news and features since 2006 

T Bailey AM asks if investors aware of risk levels in Stocks and Shares ISAs


Peter Askew, CEO of multi-asset manager T Bailey Asset Management, asks how many Stocks & Shares ISA investors may be unaware of the risks they are taking on.

Faced with the choice of some 3,000 funds, many will reach for the comfort blanket and invest with a household name, he says.  “How many will have the skill or experience to make a prudent decision in selecting the asset class in which they will invest, let alone one of the many funds available?  Regular fund investors, including those who have been squirreling away their ISA allowance over the years, perhaps – but many investors have neither the time to research the many options available, or the experience to do so.”

TBAM has analysed fund risk over four popular sectors, comparing the return and risk characteristics of these sectors over the past three years with those of T. Bailey’s own multi-asset Dynamic Fund, a fund designed to deliver UK inflation plus 3 per cent per annum on a total return basis over a market cycle. 

The average Japan fund delivered the most impressive total return, but Askew says: “Investors need to look not simply at the performance of a fund, but how much risk they are taking to secure such returns.” 

According to the TBAM data, an investor in the average Japan fund experienced a ‘drawdown’ of -12.73 per cent, those invested in the giant IA UK All Companies sector faring little better at -10.81 per cent.  “How many investors can live with a fall of 10 per cent plus, with this much volatility?” asks Askew, “or having woken up in a cold sweat, could resist the natural human instinct to sell – often at the very worst time?”

Askew believes investors need also to observe the ‘return/risk ratio’, calculated by dividing annualised returns by the fund’s annualised volatility.  This simple measure can help investors to identify which funds and fund managers are offering best value for money, the level of risk a fund manager has taken with investor’s capital, and underlines the attractions of a multi-asset solution.

TBAM writes that cautious investors may be tempted by a cash ISA, but in the current low interest rate environment, the best fixed rate cash ISA offers a return of just 1.45 per cent. “That’s well below the rate of inflation and means investors’ savings are being eroded in real terms,” Askew concludes.

Latest News

Morningstar has published a review of the European ETF market for the first quarter 2024, which finds that it gathered..
ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..

Related Articles

US ETF issuers of active ETFs are facing an increase in fees from the big custodian firms, such as Charles...
Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by