Thematic fund investors miss out on two thirds of returns due to poor timing

The paper, The Big Shortfall, revealed that investors suffered an average 4.9 percentage point annual return shortfall, with thematic funds offering an average annualised total return over a five-year period to 30 June 2023 of 7.3%, compared with an investor average of 2.4%. when the impact of cash inflows and outflows was considered. The findings indicate that investors are "collectively poor market-timers" and particularly struggle in thematic funds, as the funds seem to induce more frequent trading and a tendency to buy high and sell low. Morningstar said investors would achieve be...