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Long-term investors reap rewards

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28/05/2008

It’s no surprise that investment returns have slumped over the past year, but long-term investors have continued to reap rewards, the latest performance figures have shown.

The Association of Investment Companies (AIC) revealed a £1,000 investment in the average investment company decreased by 7% over the last year. However, the same amount invested over three years would have grown to £1,523 and over ten years would have more than doubled to £2,109. An investment of £1,000 made 18 years ago would have grown to £5,337 today.

The best performing area over the past year was the Commodities and Natural Resources sector, which was up 31%. Global Emerging Markets was in second place, up 24%, while Europe and Infrastructure were joint third, up 13%.

Over the longer term, the results were slightly different. The Asia Pacific and Global Emerging Markets sectors fought it out for best performing sector over three, five and ten years, with Asia Pacific coming second best over three years (up 135%), but first over five and ten years (up 447% and 485% respectively). Global Emerging Markets performed best over three years (up 150%) and came in second over one, five and ten years (up 24%, 326% and 282% respectively).

Unsurprisingly, performance in the Financials sector was down 25% over the last year. However, over three and five years, the sector was the best performing, up 105% and 267% respectively.

Annabel Brodie-Smith, communications director at the AIC, said: “It’s no surprise that the Commodities and Natural resources sector is out in the lead over one year with oil prices at a record high and commodity prices rising. It’s easy to see just how well the markets in the Asia Pacific and Emerging Markets have done recently as these sectors dominate the performance tables.

“It’s interesting to look at the top performing sectors but these figures clearly illustrate the importance of taking a long-term view and having a balanced portfolio with exposure to a variety of different sectors and countries. If investors are worried about investing in volatile markets they should consider regular investing which helps smooth out the highs and lows in the prices of shares, so they do not have to worry about market timing.”

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