Charles Schwab conducted a survey that found 39% of mutual fund investors surveyed have adjusted their portfolio allocation since the beginning of the stock market slide. On the flipside, 61% have not made changes to their allocation. Good, bad or inconclusive?
I say “inconclusive.” There are a number of reasons that cause an investor to maintain their allocation through bear markets. Inertia plays a role. Investors may be so frightened that they don’t open their statements and don’t make any changes. On the other hand, long-term investors may be satisfied with their allocations.
The findings -- not adjusting their portfolio allocation -- may or may not be a problem. The press release specifically said, “…just 4 out of 10 mutual fund investors surveyed have made changes…” The word “just” in the press release is indicating that a judgment has been made as to the success of those that made a change. But what changes did they make? When did they do it? Did they go to cash at the market low? Did they buy equities on a false start of the market?
In fairness, I have only read the press release. I have not seen the full report. I will be posting again after I get my hands on the full report.
The survey, completed after almost two years of bad news about the markets, also found that 36% of investors do not know which mutual funds they own. I can’t argue with this finding. Know what you own. Do it now. It’s okay to open your statements. It’s okay to call your advisor and ask questions.
How about you? Do you know what mutual funds you own? Let us know by voting in the poll.