Amateur investors are on the same level as City fund managers

Figures suggest that DIY investors can achieve returns comparable to those of highly-paid City fund managers.

Retail investors using Interactive Investor’s online platform have seen returns of 12.6% on average in the last three years. This compares to 10.7% for funds within the Investment Association 40-85% shares sector where managers invest a mixture of stocks and bonds.

Since the broker began collecting data four years ago the performance of retail investor has been on par with fund managers at 18,4 percent and 18,6 percent respectively.

Retail investors saw a 4 percent increase in the first quarter, while fund managers experienced a 4.2 percent rise.

These findings are in line with industry data that shows investors increasingly prefer cheaper trackers to fund managers. According to the Investment Association trade body, passive funds saw net retail inflows in March of £2.9 billion, while actively managed funds experienced outflows in March of £1 billion.

According to a separate study published by the broker AJ Bell, only 36 percent of active equity funds performed better than passive alternatives in 2017. Tracker funds have risen in popularity over the past decade, and now account for 24 percent of the market.

Kyle Caldwell is a fund specialist at Interactive Investor. He said, “Private investors have more freedom that fund managers.” Private investors are not measured by a benchmark, but keeping returns above inflation is the minimum goal.

A private investor may, depending on his or her appetite for risk and their goals, be willing to take on more risk by holding an increased percentage of shares. In the long run, a higher percentage of shares may be beneficial.

Interactive Investor’s most popular equity investment last month was Legal & General. This was followed by Tesla, the electric car manufacturer, and Rolls-Royce Aerospace and Defence. Last week, L&G was also the most popular investment on Hargreaves Lansdown. On AJ Bell, it was BP & GlaxoSmithKline.

Interactive Investor discovered that women and young people were the two best performing groups of its customers. Investors between 18-24 years old have averaged a 21 percent return since the beginning of 2020. This compares to an average 18 percent across the platform. Women across all age categories have seen an average return of 18.7%, compared to 18% for men.