Investment management - The importance of a long term vision

By Mattioli Woods

17 Sep 2014

This is a time of increased volatility in world stock markets and being focused on a long term investment management strategy isn’t always easy.

By Glynn Bartley, Taylor Patterson.

However, when you consider the performance of major asset classes over the long term some key philosophies can help investors keep long term investment success clearly in sight.

Building an investment strategy aligned to an appropriate risk profile provides a solid platform for investors to achieve their goals and expectations. Research shows that the key to long term investment performance is effective asset allocation with less focus on market timing or stock selection. Market cycles play out against a backdrop of economic, social and political change and many investors become tempted to react to every turn of events.

Markets are unpredictable and trying to time them means investors must get two important decisions right: when to get out and when to get back in. Historical market returns show that investors who remain invested often do better than those reacting to every event.

Diversification can help reduce volatility and smooth out returns over time. This often starts by investing across asset classes and also by investing in different companies, industries and countries. Whilst this strategy does not protect a portfolio against negative returns, it does reduce the impact of poorly performing asset classes.

By overlaying an effective asset allocation with tactical investment decisions volatility can be further reduced. This is where a portfolio goes under or overweight in a particular asset class or sector depending on the outlook. For example, most portfolios will be limiting exposure to UK government gilts as they are particularly sensitive to interest rate movements and any increase can adversely affect prices.

There are a few basic rules to investing in volatile markets, where you need to raise cash in the near term, consider doing this sooner rather than later; where you are considering investing cash then consider spreading the investments over a period of time. Both actions guard against you losing out should markets move against you in the short term. This may appear overly protective but it has been proven that investors react more from losing value than gaining it through investments.

Therefore, it is important for investors to protect their downside even if it means missing out on some of the upside. According to Bloomberg, the VIX index, often referred to as the fear index, measures the implied volatility of the S&P 500 index options in the US. Although, volatility has been increasing it is still relatively low. This is a similar story in the other major markets all wary of the risks to economic recovery from events in the Ukraine, the Middle East and the likely impact of rising interest rates. At Taylor Patterson, our investment management strategy is designed to capture the long term returns expected from investment markets whilst balancing, understanding and mitigating the risk that volatility can cause discomfort in the short term.

Latest news

1

Partner promotions at WNJ Stuart Mercer, left, and Matthew Johnson

Partner promotions at WNJ

21 May 2025

2

Accrington-made Vita Advanced Mattress wins prestigious 'Best of the Best' Award at Interzum 2025 Dr. Emily Schweissinger - Evonik, Dr. Roland Hubel - Evonik, Dr Mike Murray - The Vita Group, Natalie Watson - The Vita Group, Chris Hupfeld - Coverstro, Dr. Annegret Terheiden - Evonik and Dennis Wagner - Covestro

Accrington-made Vita Advanced Mattress wins prestigious 'Best of the Best' Award at Interzum 2025

21 May 2025

3

Napthens advises Calico Homes on land acquisition for £23m Dovestone Gardens extra care facility in Burnley Paul Hardy

Napthens advises Calico Homes on land acquisition for £23m Dovestone Gardens extra care facility in Burnley

21 May 2025

4

Construction begins on new Civil Service office building in Talbot Gateway Alan McBride Muse Will Town Defence Infrastructure Organisation Jennifer Chard Defence Business Services Cllr Lynn Williams Blackpool Council Garry Bowker Vinci

Construction begins on new Civil Service office building in Talbot Gateway

20 May 2025

5

Skiddle raises over £750,000 for charities Skiddle cheque presentation to Alder Hey Hospital

Skiddle raises over £750,000 for charities

20 May 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV122 May/June Launch Event
121 Lancashire Business View Magazine Launch
Networking
21 May 2025

LBV122 May/June Launch Event

Lancaster and Morecambe College, Lancaster, LA1 2TY

08:30 - 10:30

Sub36 Networking
Networking
11 Jun 2025

Sub36 Networking

British Jewellery School, Scorton, PR3 1BA

15:00 - 17:00

Lancashire Net Zero Carbon Conference
Net Zero Carbon Social 1200pxtrident 2
Networking
18 Jun 2025

Lancashire Net Zero Carbon Conference

Crow Wood Hotel & Spa Resort, Burnley, BB12 0RT

08:30 - 13:00

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
02 Apr 2025 - 08 Oct 2025

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 15:30

Amber River True Bearing quarterly investment seminar
LBV Hub Seminars
22 May 2025 - 22 May 2025

Amber River True Bearing quarterly investment seminar

Cottons Hotel & Spa , Knutsford, WA16 0SU

16:00 - 18:00

The Business Network Central & East Lancashire
LBV Hub Networking
22 May 2025 - 22 May 2025

The Business Network Central & East Lancashire

Mytton Fold, Langho, BB6 8AB

11:30 - 14:15

Preston Freelancer Meet-Up: May
Freelancer Meet-Up May.png.png
LBV Hub Networking
22 May 2025 - 22 May 2025

Preston Freelancer Meet-Up: May

society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Liverpool Business Expo 2025
https---cdn.evbuc.com-images-881365363-4862066883-1-original.20241023-085714.jpeg.jpg
LBV Hub Awards
23 May 2025 - 23 May 2025

Liverpool Business Expo 2025

Aintree Racecourse , Liverpool , L9 5AS

09:00 - 15:00

Advantage: AI – A Workshop for Business Leaders – May 29
Artboard 15.png.png
LBV Hub Seminars
29 May 2025 - 29 May 2025

Advantage: AI – A Workshop for Business Leaders – May 29

Door4 Office, Burnley Wharf, Manchester Road, Burnley, BB11 1JG

09:00 - 11:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV122 Online Graphic
Subscribe now

Weekly news bulletin