Investors to get to the core of the matter

The latest investor research conducted by J.P. Morgan Asset Management has found that more than one in ten (12%) investors never review their investment portfolios and a further quarter (24%) of investors say they only review their investments on an ad hoc basis ‘when they get around to it'.

Current market conditions, particularly prevailing low interest rates, combined with the potential impact of future inflation over the longer term are posing serious challenges for portfolio construction.  In light of this, J.P. Morgan Asset Management has conducted a survey to assess investors' attitudes towards their core investments - the basic holdings that you have to achieve your-long term investment goals.  The survey aims to provide an insight into investors' portfolios and looks at what proportion they have invested in core holdings, what types of investments these are and how often they are reviewed.

15% of investors admitted that they did not hold core investments within their portfolio, suggesting a ‘scatter gun' approach to investing

32% of respondents with a core investment consider cash to be the main holding. This rises to nearly half (47%) of 18 to 34 year olds.

In comparison, 32% of investors surveyed consider equities to be their core holding. However, when asked how much of their equity investments constitute a core holding, 36% stated equities made up less that 40% of their core - a very low percentage.

David Barron, Head of Investment Trusts at J.P. Morgan Asset Management said, "Investors cannot take for granted the importance of having a carefully selected core investment element to their portfolios. Core investments should be invested to deliver a long term return and protection against the future impacts of rising inflation and changing interest rates. The survey results highlight that investors are not thinking strategically about their core investment holdings. A high proportion of respondents hold cash as a core investment, which is offering very little if no returns currently. Although equities can be more volatile in the short term, investors should look to the longer term and consider the additional benefits they can offer. In particular equities can help combat the impact of inflation that cannot be gained from cash or some bonds."

Barron went on to say, "The percentage of a portfolio invested in core assets depends on the individual investor's needs and objectives. The balance between the core investments and higher risk satellite investments will be a reflection of these requirements and investors' attitude to risk. These will change periodically and it is important all elements of their portfolio are considered at least annually."

David Barron cited three J.P. Morgan Asset Management investment trusts which could be considered by investors for inclusion in their core investments. JPMorgan Claverhouse Investment Trust seeks to achieve capital and income from UK large cap companies. The investment trust has paid investors an above inflation dividend for 37 consecutive years. Another investment trust is the JPMorgan American Investment Trust which focuses on investing in large cap US stocks based on a stock picking principle. The third investment trust highlighted by David Barron is the JPMorgan Overseas Investment Trust. The focus of the investment trust is to invest in companies in all geographical locations using an extensive team of analysts.