Investor loyalty is declining as fund holding periods shrink and trading surges, according to a report. Traditional long-term investment models are being replaced by a more dynamic, personalised, and responsive approach to portfolio management.
Equity fund holding periods have fallen from seven years in 2016 to just four years in 2024, according to global funds network Calastone’s data, while bond and global equity funds have seen similar drops, reflecting a more hands-on approach from investors.
This increased activity has driven a nearly 80% rise in trading volumes on Calastone’s network between 2018 and 2024. Investors are no longer content with passive, long-term holdings, instead opting for frequent portfolio adjustments in response to macroeconomic shifts. “The increasing engagement, levels of sophistication and shorter holding periods we’re seeing indicate a profound shift in investor behaviour,” said Edward Glyn, managing director and head of global markets, Calastone.
Equity funds have seen a 40% decline in holding periods, dropping from seven years in 2016 to just four years in 2024, as investors adopt more proactive portfolio management and regular rebalancing. Bond funds have experienced an even more dramatic shift, with holding periods halving from eight years to four years, largely driven by interest rate fluctuations and macroeconomic changes. Even traditionally long-term holdings such as global equity funds have seen holding periods slashed in half, as investors seek greater control and flexibility in their portfolios.
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This shift presents both challenges and opportunities for asset managers. “Today’s investors want a more proactive role in their portfolios, and they expect seamless, efficient interactions with an increasing range of investment options,” Glyn added.
To meet these evolving expectations, fund managers must embrace technology and innovation, offering tailored investment solutions and real-time insights to help investors make better-informed decisions, according to the data provider. Digital tools, enhanced accessibility, and cost-efficient trading mechanisms are now critical in ensuring long-term success in the rapidly changing investment landscape.
One of the most promising solutions is tokenisation, which streamlines fund creation, administration, and distribution, reducing friction and increasing liquidity, according to Calastone. By streamlining processes such as fund creation, administration, and distribution, tokenisation can deliver benefits such as lower costs, reduced friction, and improved liquidity. It also enables greater transparency and customisation, empowering fund managers to offer more flexible and responsive products across new markets and asset classes.
“The challenge for the industry is to meet investor expectations without adding complexity or cost,” Glyn said. “Innovative solutions, such as tokenisation, offer a powerful means of making the investment journey more engaging, faster, more transparent, and more accessible.”
