“Decisions about your portfolio are far better made with firm investment principles, rather than superstitions in mind” says Fidelity director
According to Fidelity International, investors who ‘sold in May’ have missed out on the opportunity to increase their returns during the summer months.
A number of markets climbed by more than 20% in this time period.
The notion of selling in May is based on the premise that equity markets will go through a seasonal decline during the summer.
Therefore investors sell their holdings at the beginning of May and stay away from the markets until mid-September.
Contrary to this view, a number of markets around the world enjoyed fruitful summers. The FTSE All Share index rose by 4.52% between 1 May and 31 August while the Nasdaq is up by 21.58%.
Of the six markets included in Fidelity’s analysis, just the Nikkei 225 fell during the period by 2.30%.
| Market index | Returns, 1 May-31 August 2021 |
| FTSE All Share | 4.52% |
| FTSE 100 | 3.64% |
| Nasdaq | 21.58% |
| S&P 500 | 8.70% |
| Dax 30 | 4.62% |
| Nikkei 225 | -2.30% |
The adage remains as unpredictable a guide for investors as ever, with Fidelity International’s analysis revealing 2021 is the 18th occasion in 30 years that it has fallen short for the FTSE All Share.
Ed Monk, associate director for Personal Investing at Fidelity International, comments: “2021 would’ve been a painful time for anyone following the old adage to ‘sell in May’. The giant US market, in particular, has gone from strength to strength this year and has hit multiple new highs as the summer has progressed. With markets elevated it is understandable that investors will look for the moment when the tide can turn but these numbers show that, once again, staying invested has proved the best policy.”
Monk continues: “Decisions about your portfolio are far better made with firm investment principles, rather than superstitions in mind. As this year’s analysis shows, there’s no certainty that “selling in May” will pay. Investors who chose to exit the market over the summer will not only have missed out on the opportunity to boost their returns, but now face having to buy back in at a higher price.”
