Fiducia Wealth Management
Posted in Investing on 06.09.14

We all know the well worn story of buy a range of assets, occasionally re-adjust and over the years let your portfolio increase in value riding out the storms of near term volatility. The data available now goes back over 100 years especially with regard to US markets and means this makes perfect sense.

The clear conclusion is multi asset portfolio returns over the long term can be circa 4%-7% annualised which gives a decent real return over the current low inflation rate, although if inflation stays low then logically returns will head to the lower end of the range.

Where investors need to be well advised is on short term volatility which can be scary to say the least.

At points of stress, short term market movement can be extreme; the start of World War One (post a market suspension) saw stocks fall over 25% and following the 1929 crash, equities declined in the great depression by more than 40%.

Closer to home, the recovery in 1974 post the oil crisis was dynamic  as London stocks rose in 30 days by over  50%. The so  called crash of 1987 saw a decline of over 20% in a couple of days ( although oddly enough stocks finished up in that particular calendar year).

Dow Jones 100 Years

Thus the message is clearly shown by the chart above,  the longer you invest for, the more short term volatility is smoothed and the confidence levels of your long term returns should be high.

Of course the future is difficult to predict, so we suggest investors focus their attention on the distribution of potential future outcomes. If you view the future as a distribution of asset returns then the benefits of asset allocation become clear.

Looking at different assets, equities have a higher average expected return than many perceived less risky asset classes, but with a much wider distribution, or put simply they are more “hit or miss” in the short term.  So when constructing portfolios we use different assets chosen by our investment managers so as to help our investors mitigate the extreme movements in asset returns. Thus we are able to face the future better prepared, with our analysis and awareness of the extreme market moves of the past.

Experienced advisors that have lived and worked across both market and economic cycles should be able to help through the future volatile times, no matter what the reasons for market movements.

Here at Fiducia we have years of experience so building the right portfolio for all seasons is what we do.


If you would like to know more about how we as Financial Advisers can help you  with your Investments then visit the Investment Management section of  our website: Investment Management or send us email at: [email protected]

The information contained in our website is for guidance only and does not constitute advice which should be sought before taking any action. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occurred in connection with the content hereof and any such action. Professional financial advice is recommended for every case.

Fiducia is a multi award-winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border.

Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.

Fiducia Wealth Management Ltd. is authorised and regulated by the Financial Conduct Authority. FCA No. 408210

Fiducia Wealth Management
Posted in Investing on 06.09.14