Taking cues from elite athlete training programmes when investing for the long term

J.P. Morgan Asset Management
JPMorgan Asset Management
JPMorgan Asset Management
Sports has long been a part of Australia’s national identity. By taking cues from elite athletes in their training programmes, investors could consider adopting a perseverant and consistent approach when they map out their long-term investing strategy (1).

One of Australia’s most decorated swimming champions has reportedly2 said that she focuses on getting in a swim each day during her training. She also does a lot of pace work to prepare her body for the different types of swimming styles and strokes. And during competitions, she stays focused on what’s she’s doing in her lane.

Perseverance and consistency

Investors, based on their investment objectives and risk appetite, could take a similar approach to athletes in their day-to-day training, focusing on consistent and regular investing1. Athletes generally train regularly over the long term, and not just aggressively over a short period.

Athletes also have specific needs for strength and agility, and the training would vary according to their requirements. In order to be able to compete over longer distances some athletes would ‘dial it back’ and use a pace that they can sustain for a longer time3. Similarly, the same could be applied when investing for the long term. Investors could keep their financial goals in-check, invest regularly and stay invested1

THE ROLE OF LONG-TERM INVESTING1



Investing a fixed amount of money regularly can help reduce the impact of short-term market volatility on the overall investment in the long run.
A key reason to start early and stay invested is that this can help benefit from the compounding effect over a long period of time.

Athletes could also face ups and downs in their athletic careers. Likewise for investing, where markets can always have a bad day, week, month or even year. Market volatility is normal, and investing can involve significant drawdowns from time to time. Investors should be aware of the volatility they can handle, but troubled times aren’t a sign to sell everything. 

What are the factors to consider when investing?

  • There are many investing options, but it’s important to make choices that are aligned with your investment objectives and risk appetite. For goals with longer time frames, choose an investment strategy that allows you to take advantage of the longer investment horizon. Additionally, consider having some liquid short-term investments and cash to help you cover emergencies and upcoming large expenses so that you won’t have to sell your investments during down markets.

  • Markets are unpredictable and no single asset class can be an all-time winner. A well-diversified portfolio can help manage risk while seeking consistent return opportunities4

  • Looking at performance data for the past 70 years, as illustrated in the chart4, holding only equities has at times led to an almost 40% decline in value in any one year. However, adding bonds reduces the extent of that drawdown to 15%. Moreover, by increasing your investment horizon to five years, holding both bonds and equities minimised the drawdown to 1%.

Time, diversification and the volatility of returns4


4. Source: Barclays, FactSet, Robert Shiller, Strategas/Ibbotson, U.S. Federal Reserve, J.P. Morgan Asset Management. For illustrative purpose only, indices do not include fees or operating expenses and are not available for actual investment. Returns shown are based on calendar year returns from 1950 to 2020. Large cap equity represents the S&P 500 Shiller Composite and bonds represents the Strategas/Ibbotson for periods from 1950 to 1980 and the Barclays Aggregate after index inception in 1980. Past performance is not a reliable indicator of current and future results. Data as of 30.09.2021.

Conclusion 

Taking a cue from elite athletes as they train towards achieving their goals, investors could consider investing regularly and staying invested as they strive to achieve their financial objectives.



This content represents our investment team’s current view and overall strategy provided for information only based on current market conditions not taking into consideration any specific investor’s investment objective and risk appetite. Not to be construed as investment recommendation or advice.

Diversification does not guarantee investment return and does not eliminate the risk of loss.

1. For illustrative purposes only based on current market conditions, subject to change from time to time. Not all investments are suitable for all investors. Exact allocation of portfolio depends on each individual’s circumstance and market conditions.
2. Source: “How Emma McKeon Became the Most Decorated Australian Athlete of All Time”, MySwimPro, as of October 2021.
3. Source: “How to build Swim Endurance”, My Chicago Athlete Magazine, 13.03.2018. 

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