By Julie Harris, August 2025
Morningstar’s Mind the Gap research reveals a simple truth: investors frequently capture significantly less than the funds themselves deliver.
Globally, individuals typically underperform funds by around 1–1.7% per year due to mistimed entries and exits. Over time, this can erode up to 15% of potential gains.(Financial Times)
UK Context: DIY vs Advised Investors
In the UK, the difference is even more pronounced. A Legg Mason study shows that advised investors earned ~7.5% last year, compared to 5.9% for DIY investors—a gap of roughly 27%.(Funds Europe)
DIY investors also held nearly 47% of savings in cash, while advised counterparts held just 30%, introducing a significant “cash drag.”(Funds Europe)
What Drives the Discrepancy?
Market timing error: Many investors buy after prices rise and sell after they fall, entrapping themselves in underperformance.(assets.contentstack.io)
High cash holdings: Cash idle in low-yield accounts drags long-term performance.(MoneyWeek)
Lack of discipline: Without a structured plan, investors often succumb to short-term noise.
Behavioural gaps: Without guidance, investors are more prone to emotional decision-making.
What This Means for UK Investors
Advised clients gain a measurable advantage—not by picking better funds, but by acting more wisely and staying invested.
Reducing cash holdings and avoiding knee-jerk trades helps close the investor-fund return gap.
Behavioural coaching matters—guidance helps keep investors aligned with the plan, even when markets wobble.
Oak Four’s Approach: Bridging the Gap
At Oak Four, we help clients:
Stay invested through market cycles, avoiding costly timing errors
Manage cash levels efficiently, keeping capital working, not idle
Stick to a tailored, long-term strategy, so behaviour supports—not sabotages—your returns
Ready to Close the Gap in Your Portfolio?
If you’d like to assess how your investments stack up—or explore a personalised plan that maximises long-term returns—reach out to us today.