Bitcoin gamble has trounced traditional investment strategies

The new AJ Bell Investor Strategy League compares the performance of a plethora of different consumer investing styles to find out which have done best over the last year, and the last decade. Key findings from the 2022 AJ Bell Investor Strategy League include:

• Bitcoin has trounced traditional investment strategies over one and ten years, but it remains a speculative gamble
• It is followed (not very closely) by a global tech stock portfolio
• Cash has been the weakest strategy over ten years
• Index investors beat stockpickers in 2021, but over ten years stockpickers are just ahead
• A strong year for residential property only bags a mid-table spot
• ESG funds are also mid table, but considerably ahead of sin stock investors
• Safe haven strategies like cash, gold and bonds are languishing at the bottom of the performance league over one and ten years
• Warren Buffett has had a good year, but he only just nudges ahead of our random fund picker, Binky the cat

Laith Khalaf, head of investment analysis at AJ Bell, comments: “Professional investment strategies tend to be characterised according to four main style factors: growth, value, quality and momentum. However, it’s clear that consumers have a much broader approach to managing their finances, which encompass not just these stock market factors, but other assets such as cash, property and more recently, cryptocurrencies. Some consumers invest actively, others prefer index funds; some follow specialist strategies, while others look to limit risk.

“There’s no exhaustive list of investment styles, and many retail investors will mix and match. But there’s a dearth of literature which compares the different strategies that consumers, rather than professional investors, might pursue. The AJ Bell Investor Strategy League seeks to address this by looking at the performance of some key styles, strategies and asset classes that ordinary savers might adopt, ranking returns over one and ten years. This is the inaugural annual report, and we anticipate it will slowly change over time to reflect new investment trends, but each edition should reveal some of the key factors affecting investor returns and provide some context for financial decisions in the coming year.”