Share experts discuss validity of 'Sell in May' adage

The saying is based on the belief that investment returns are typically less impressive in the summer months when, historically, much of the City shuts up shop.

Investors are advised to take their money out of the stockmarket in May and stay away until St Leger Day, a date in September linked to a famous horse meet of the same name, which starts this year on 12 September.

But Moira O'Neill, head of personal finance at interactive investor, warns that investors should think twice before taking the old adage too seriously. "The market is a very different place to the days of old - now the City never sleeps," she says.

• Sell in May? Funds and trusts to consider dumping

Analysis from investment group Fidelity shows that investors tempted to heed the old proverb may be missing out.

Its figures show investors who kept their money in the market between May and September would have achieved positive returns in 18 of the past 30 years.

If you had invested £10,000 in the FTSE All Share 30 years ago and left your money in the stockmarket the entire time, you would now have an incredible £128,033.

Those who had gone to the hassle of selling their investments in May each year and investing again in September would have £126,950.

Those who sold in May 1989 would have missed out on hefty returns of 12.5% over the summer months, and on returns of 17.8% between May and September in 2009. But they also would have avoided a loss of 17.6% over the summer in 2002 and a 10% loss in 2011.

Tom Stevenson, investment director at Fidelity, says: "While many stockmarket adages have a ring of truth to them, they should invariably be taken with a pinch of salt and the St Leger Day saying is no different.

"Predicting the best time to invest or sell out of the stockmarket really is a fool's errand and getting it wrong can be a costly gamble, which can seriously compromise your returns."

While the overall returns of the two approaches are not dissimilar, investors should not forget to factor in the costs involved in buying and selling investments, which eat into your returns.

Ms O'Neill adds: "No matter what the season, every investor should have a spring-clean once or twice a year with a view to re-balancing their portfolio, by selling some of the funds that have done well and buying some that haven't - it might sound counter-intuitive, but research shows this strategy works over the long term."

Mr Stevenson adds: "If there is one stockmarket adage that you should consider following it is "time in the market matters more than timing the market" - so stay invested and remain focused on your long-term investment goals."

This article was originally published in our sister magazine Moneywise. Click here to subscribe.