Long-term performance is crucial for many investors

Monday 15th April 2013

Almost one in three investment advisers are not confident active fund managers can consistently outperform indices over five years, research by housing investment and shared equity mortgage provider Castle Trust shows.

The nationwide study found 30% of investment advisers do not believe they can beat the index over five years – and that rises to 40% when the performance period is cut to a year.

Castle Trust, which offers an index tracker with no annual fees, believes the doubts over performance support growing interest in index funds across retail and institutional markets.

The Castle Trust Income HouSA tracks the Halifax House Price Index and also pays an annual income of between 2% and 3%, depending on the term of the investment. The Castle Trust Growth HouSA offers a multiple of between 1.25 times and 1.7 times any increase on the Halifax House Price Index, and limits the loss to between 0.75 times and 0.3 times any decline – outperformance that is unique among index trackers.

Research among investment advisers shows that the long-term track record is the most important factor for them when recommending products – 77% of advisers chose it ahead of steady expected returns, chosen by 62% of advisers. UK housing has delivered higher risk-adjusted returns over the 30 years the Halifax House Price Index has been calculated than other major asset classes, including equities and commercial property.

Sean Oldfield, chief executive officer, Castle Trust said: “Concern over the long-term ability of active managers to outperform their benchmark indices is well-documented and is recognised by advisers.

“They clearly recognise the need to deliver long-term performance for their clients and that should mean at least a core holding of index tracking investments. The advantage of HouSAs is that unlike other index trackers they will outperform the index and unlike actively managed funds there are no high charges.”

Castle Trust HouSAs are available for terms of three, five or ten years and customers can invest from as little as £1,000. HouSAs qualify for inclusion in ISAs, Junior ISAs and SIPPs. 


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