Investors' average holding periods have fallen, recent research from fund network Calastone has found, with investors now holding equity funds for just four years, down 40% from seven years in 2016.
Perhaps the starkest drop came for global equity funds. Despite being traditionally long-term investments, the average holding period has halved from eight years to four.
Bond funds’ average holding period was also cut by 50% from eight years to four years, in response to interest rate changes and other macroeconomic factors, the report found.
Analysts at Calastone said these developments reflected investors developing a more “hands-on approach” and becoming more proactive. For example, the study found there has been an 80% rise in the volume of trading on its network between 2018 and 2024.
As investors become more proactive, traditional models of portfolio management “reliant on static, long-term holdings” are being replaced by more dynamic and personalised approaches.
Edward Glyn, managing director and head of global markets at Calastone, said: “Today’s investors want a more proactive role in their portfolios and they expect seamless, efficient interactions with an increasing range of investment options.
“Fund managers must now cater to a more engaged investor base,” he said, which would only be possible with increased technological innovations to improve transparency and accessibility within the industry “without adding complexity and cost”.
Glyn said tokenisation was one of the core ways asset managers could achieve this. Tokenisation refers to representing or turning investors units in a fund into a digital token recorded on a blockchain, to further digitise the fund management process.
While this technology is still in its infancy, Calastone analysts argued it could “address many of the inefficiencies which frustrate today’s investors”. Tokenisation could help streamline processes such as fund creation, administration and distribution, creating a fund management industry more suited to proactive investors.
Glyn concluded: “Innovative solutions, such as tokenisation, offer a powerful means of achieving this balance by making the investment journey more engaging, faster, transparent and accessible."