10-Year Annualized Returns in the U.S. Large-Blend Category
Sources: Capital Group, Morningstar as of 6/30/17. Returns based on equal weighted averages of funds within the Morningstar U.S. Large-Blend category. Investor Return measures the experience of the average investor in a fund and incorporates the impact of cash inflows and outflows from purchases and sales.
Are your clients concerned about volatility in their equity portfolio? Their attempts to time the markets probably aren’t the answer. Data from Morningstar shows that, on average, investor returns lag fund returns. A fund’s investor return includes the impact of purchases and sales of the fund. The difference between the two return measures is considered a proxy for investors’ ability to time markets. Investor returns lagged because many investors chase past performance and end up buying funds too late or selling too soon. This effect is amplified in higher volatility funds, which are more prone to periods of sharp declines that could cause investors to sell prematurely and miss a subsequent rebound.
Remind clients that they should consider a more disciplined, long-term approach to investing and avoid jumping from fund to fund, especially when faced with higher volatility.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility, as more fully described in the prospectus. These risks may be heightened in connection with investments in developing countries.
Certain market indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index.
Securities offered through American Funds Distributors, Inc.
Past results are not predictive of results in future periods.
Content contained herein is not intended to serve as impartial investment or fiduciary advice. The content has been developed by Capital Group, which receives fees for managing, distributing and/or servicing its investments.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.