Investor loyalty has waned as churn rates surge across investment funds, according to Calastone, the global funds network.
Investors are becoming significantly more proactive, trading with increased frequency and drastically reducing average holding periods across key asset classes. For example, the average holding period for equity funds has dropped from seven years in 2016 to just four years in 2024—a sharp decline of over 40%.
The increased frequency of trading by investors has led to a nearly 80% rise in volumes on Calastone’s network between 2018 and 2024. This combination of shorter holding periods and increased trading activity highlights a growing trend of investors closely monitoring their portfolios and making more frequent adjustments to their investment strategies.
Its key findings were:
• Equity Funds: Holding periods have fallen by over 40%, from seven years in 2016 to four years in 2024, reflecting a shift toward proactive management and regular rebalancing.
• Bond Funds: The average holding period has halved, from eight years to four years, as investors respond to interest rate changes and other macroeconomic factors.
• Global Equity Funds: Even traditionally long-term holdings, such as global equity funds, have seen holding periods cut in half, from eight years to four years, as investors adopt a more hands on approach.
Calastone further said this shift in investor behaviour poses both challenges and opportunities for the asset management industry. Investors now demand greater control, transparency, and flexibility in managing their portfolios, driving an industry-wide need for innovation. Traditional models, reliant on static, long-term holdings, are giving way to a more dynamic, personalised and responsive approach to investment.
Fund managers must now cater to a more engaged investor base by delivering tailored investment products, actionable insights, and seamless experiences that empower investors to make the best decisions. Achieving this requires leveraging digital solutions that enhance accessibility, transparency, and efficiency, ensuring that investors can access the right products at the right price to maximise returns and drive alpha in a competitive marketplace.
Edward Glyn, managing director and head of global markets at Calastone, said: "The increasing engagement, levels of sophistication and shorter holding periods we’re seeing indicate a profound shift in investor behaviour.
"Today’s investors want a more proactive role in their portfolios, and they expect seamless, efficient interactions with an increasing range of investment options. The challenge for the industry is to meet these expectations without adding complexity or cost. Innovative solutions, such as tokenisation, offer a powerful means of achieving this balance by making the investment journey more engaging, faster, more transparent, and more accessible."
