Investment fund reports designed to help savers make informed decisions are falling short, a new report claims.

As many as 80 per cent of investors don't look at fund performance data when making investment decisions, data shows, as investors find they make them feel 'overwhelmed and confused'.

Investment funds are required to publish quarterly fund performance reports, which investors can use to assess the performance of their current holdings and potential future investments.

However, the report by The Investing and Saving Alliance (TISA) indicates that investors are struggling to navigate these documents.

This is something that TISA says could damage the new Government's bid to foster a culture of investment in the UK as part of its bid to kickstart economic growth.

Carol Knight, chief executive of TISA, said: 'The findings of this research are stark. The very detailed, quarterly performance information, provided at great cost by the financial services companies, is simply not being used. It's not helping the vast majority of consumers.

'Addressing this is vital if we are to build the investment culture the Government says it wants, and the economy urgently needs,' Knight said.

'As more people look towards investing, we are in danger of faltering at the final hurdle if we do not ensure investors feel confident and informed.'

A quarter of less confident investors said they struggled to understand financial terms used in performance reports and a third said they couldn't understand the performance metrics used.

And the confusing reports appear to be widening the gender investing gap. 

Three quarters of male investors reported struggling with these performance reports, while 85 per cent of female investors struggled. Those from ethnic minorities fared even worse, with 94 per cent struggling with the reports.

The data indicates that some 47 per cent of investors said they are more likely to turn to friends and family for investment advice than to published results.

A similar number turn to financial websites, such as This is Money. Some 19 per cent look to TV programmes, while 14 per cent use social media over performance reports.

Knight added: 'As the Government seeks to encourage more people to invest their savings, reimagining how we present information on fund performance will ensure those who do invest are supported to make the most informed decisions when deciding what to do with their money.'

How performance figures could be improved

Fund performance data can only go so far in helping many investors understand the merits, or lack thereof, of a potential investment.

But it should help them understand what a fund does, where it invests and whether an actively managed fund has shown market-beating potential. 

Written in jargon-heavy technical language, and packed with figures, performance reports are far from an easy read.

At best, this makes life difficult for budding investors, at worst it could put them off investing entirely.

Knight said: 'Performance information should empower investors with the clarity and confidence to make decisions on their savings and investments. However, in their current form, they are often packed with jargon making it difficult for even confident investors to extract key insights.

'To ensure investors can understand how their investments are performing and what actions they may need to take, we need to rethink what information is included and how it is presented to make these reports accessible for investors of all backgrounds.'

Some 95 per cent of less confident investors said educational content would improve their understanding of these reports, with a similar number saying it would aid their decision-making.

TISA says benchmark data, allowing investors to compare performance with metrics like inflation and cash savings rates, would also help them to make informed decisions.

Similarly, the ability to view these metrics in multiple ways, such as graphs or tables, could improve understanding.

TISA also says AI chatbots could help investors to answer specific questions relating to a fund's performance.

Liz Waldron, head of UK personal investor client experience and digital at Vanguard, said: 'Fear and friction often prevent people from investing. As an industry, we need to build confidence and guide people toward long-term investment success. We've seen that once someone decides to start investing, they can quickly feel overwhelmed by the fund choices and information put in front of them, leading to decision paralysis.

'By simplifying fund information and making comparisons easier—using advanced technology—we can break down these barriers and empower more people to take control of their financial futures.' 

Past performance isn't everything

While the past returns of a fund are something investors need to be aware of, they don't provide the whole picture.

As financial institutions so often remind investors: past performance is not a guarantee of future results.

Tom Bigley, fund analyst at Interactive Investor, said: 'A strategy with a proven track record that has demonstrated outperformance versus peers will often have quality characteristics that will draw the attention of new investors. 

'While this is a great starting point, there are many other factors that investors should consider which are outlined below.'

Beyond performance, Bigley recommends that investors consider a fund's management team and the experience they have between them.

He said: 'A red flag to watch out for would be a departure of a manager who was deemed a key decision maker. If there was no clear succession planning in place, this would be on worth investigating.'

He added: 'Strategy is also an important consideration. Investors should be mindful if a manager has decided to change the objectives or benchmark of the fund and what impact it could have on your investment objectives. Often, to chase better returns or to avoid losses, managers can gradually diverge from a set mandate, or experience so-called 'style drift'.'

Meanwhile, Laith Khalaf, head of investment at AJ Bell, warns that investors should also consider a fund's fees when making investment decisions.

He said: 'Fees can erode returns over time, making it essential for investors to scrutinise a fund's expense ratio and other associated costs. Even seemingly small fees can significantly impact long-term gains, especially in actively managed funds. It's important to assess whether the value provided by the fund justifies its fees.'

Similarly, Khalaf warns that not all funds will fit with an investors risk portfolio.

He said: 'Understanding a fund's volatility, drawdown history, and sensitivity to market changes can help investors gauge the level of risk they are assuming. A fund with high returns may achieve those gains through excessive risk-taking, which could result in severe losses during market corrections.'

Many investments providers compile fund lists, which consider the performance of the funds, as well as other criteria such as sector, goal and value.