Do they not offer a global equity only tracker e.g Aegon Blackrock MSCI world index. Having 50% in the UK is costing you a lot.Here is the factsheet for the AGN BLK 50/50 Glob Eq Idx (BLK).
Obviously the last 5 years has been extremely volatile, so that performance data is all over the place. But, the fund has tracked its benchmark, which is what it's supposed to do I guess.
Pension fund performance - do you monitor yours, how is it doing, do you actively change it?
- Thread starter danlightbulb
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I manage mine. Just after the brexit vote I moved to mostly European and Internationally invested funds and soon after also moved some to funds tracking technology/software companies.
Made some fairly good returns. One of these funds is now just above 60% return!
Made some fairly good returns. One of these funds is now just above 60% return!
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Im not actually in that fund anymore, I came out of it 4 years ago to improve my overseas equities proportions. I was just using it as a comparison.
This is what makes assessing this stuff so difficult. Is there an approach you're supposed to use?
Take three factsheets - AGN BLK 50/50 Glob Eq Idx (BLK) above which is all equities, 50% of which is UK, and has returned 5.4% p.a over 5 years and 13.9% last year, with a risk score of 5/7.
The two funds Im in since my switch around in 2020 are 30% in AGN BLK World (ex UK) Eq Idx which is equities outside of UK, and this has returned 9.1% p.a over 5 years or 12.5% last year, with a risk score of 6/7. So this has done better than the fund above over 5 years but worse over the last year.
And the other fund Im in is 70% in the AGN BLK Consensus Index (BLK) which is a multi asset fund so includes equities (UK and overseas), bonds, gilts, cash. This has done 4.3% p.a over 5 years and 8.1% in the past year with a risk score of 4/7.
So overall my returns have been around 5.7% p.a over five years across both funds as an average.
So if I was 100% invested in the AGN BLK 50/50 Glob Eq Idx, I'd have made the most in the last year, but less over five years than the funds Im in. And if I'd have been 100% ex-UK equities, rather than the multi-asset fund, then I'd have had returns closer to 10% p.a instead of averaging about 5.4%.
So I feel I can still improve on this, I want more like 7-8% p.a
One lump sum. Eg, if your bonus or pay pay rise now pushes you over you pay that amount into pension before the the financial year is out. Though I’ve never had to do this before and only going to the next financial year (eg one year from now) I’ll need to do it).
Though I guess yeah you could up your % though I think a lot do it at the end because they don’t know how much bonus they’ll get.
In a sense, "monitoring performance" is not a good thing. Values will rise and fall over time, and just because a fund drops in value / doesn't rise as much as you'd like, doesn't mean it's bad.
The problem is that very few people even bother to choose their own funds, and of the minority that do, very few have actually thought through what they've trying to achieve, what they've bought and why they've bought it.
Ideally you should be picking funds based on the outcome you want to achieve and then checking that they're doing that - and in some cases flat-lining will be exactly what you'd expect, and you'd keep them.
People often get stuck in this idea of "oh this went up 15% therefore I picked well" or "if I'd bought something else, it would have gone up by 5% more so I've got the wrong thing and need to sell it", which is counterproductive and just leaves you chasing the things that were good the year before with no overall strategy.
The problem is that very few people even bother to choose their own funds, and of the minority that do, very few have actually thought through what they've trying to achieve, what they've bought and why they've bought it.
Ideally you should be picking funds based on the outcome you want to achieve and then checking that they're doing that - and in some cases flat-lining will be exactly what you'd expect, and you'd keep them.
People often get stuck in this idea of "oh this went up 15% therefore I picked well" or "if I'd bought something else, it would have gone up by 5% more so I've got the wrong thing and need to sell it", which is counterproductive and just leaves you chasing the things that were good the year before with no overall strategy.
Soldato
Should remember that 6/7 is pretty high risk.
All the equity only funds are 6+ on the risk scale. Only way to get that down is to go for multi asset funds which include bonds, gilts and cash. Which is what I did, as I said in post 1 im 78% equities, 22% bonds/gilts/cash. But sacrifices returns doesn't it, 5.4% p.a instead of 10% p.a.
So how do you judge good then?
Outcome is obvious isn't it - maximum return for minimal risk. Obviously there will be an optimum level.
Im not interested in ethical funds or any particular developing regions, just want max returns for lowest acceptable risk.
only started really paying in to a pension 8 nearly 9 years ago, (42 this year) have mine split across 4 equity's currently, all at a higher risk as i was starting with nothing so didn't mind the risk so to speak but as it grows i do start to worry a bit that i should perhaps change the risk profile to be more moderate,
Soldato
Yep. I would personally go risky early on, but then derisk as I got older, which is kinda the point in lifestyling
Also, not directed at you.
People thinking the bonds losing value is bad its only an issue in the short term the are low value as they pay face value. So as long as your not about to take an annuity they will probably come good.
Its just a side effect of the very significant increase in interest rates.
If you thinking of going drawdown you should probably not be using a lifestyling product anyway, they are really designed for selling the fund to purchase an annuity.
43. So 20-30 working years left.
In theory now is the time for my pension fund to experience the maximum growth it can. There is enough in there to give it some punch, and Im paying in the most I ever have, and I am young enough to still take some risk on it.
Oh absolutely. And the problem in my case is that when I started paying into the workplace pension I was 24 and not earning much, and we didn't get any say in the choice of funds. In hindsight, for someone my age it should have been 100% equities with a high US proportion. But they didn't do that, so in combination with my low contributions the early performance was poor.
We were only given the ability to manage our own funds in 2015, and I only looked at it in detail in 2020. So now Ive begun to correct the previous underperformance - Ive switched funds, paid in a lot more. So now I need to maximise the returns whilst I still have time.
There's not really such a thing as max return for min risk - as you say there's an optimal level but that depends totally on your situation. For example, if you own your own property you're already exposed to the movement of property price and could easily skip REITs. If you might want to buy in the future, having a residential REIT might be sensible since that adds property exposure. And in that case, you might want to find one that focuses on the UK. Good would be that it maintains its investment strategy, tracks in line with indices etc.
If you want to buy an actively managed fund, you'd want to check that's it's following its investment principles. See for example Neil Woodford, where people thought it was buying standard market-traded assets, and then reacted with horror when it turned out that a) it had lots of unlisted assets and b) was losing money rapidly.
Personally, I'm still 100% equities, and I prefer global unhedged passive trackers. So the main thing I can look at is tracking error - i.e. the extent to which it matches the relevant index (e.g. MSCI World or FTSE All World). If it's gaining more than the index is, that might sound great, but actually could suggest that they're doing something wrong. But I might also want to consider the extent to which the fund / index I choose covers small cap, since many don't, and add that in manually to increase coverage.
When I'm closer to retirement, I'll start building a fixed income / cash element to reduce my exposure to 80% equities because I want less volatility in the first 2 years of retirement to reduce sequence of return risk.
Point being, a single, one-size-fits-all outcome doesn't really exist. And if you want high returns, you have to increase your risk - and only you can really decide what's right for you. After all, even if you get the investment right, if 3 months into a crash you lose your nerve and sell the entire lot, you didn't achieve much. And a hell of a lot of people did that in 2007.
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Mind if I ask your age?
Hmm. Maybe I'll increase my equities from 78% then. I remember when I considered this last time, and I thought about doing 85% or 90%, but what stopped me was thinking well what's the point of having just 10% in bonds anyway? If the whole stock market crashes and I lose 90% of everything, having that last 10% left over is not going to make much difference.
I thought the idea of having a mix of equities and bonds/gilts was supposed to be when one doesn't do well the other one takes up the slack. But that doesn't appear to have happened.
I thought the idea of having a mix of equities and bonds/gilts was supposed to be when one doesn't do well the other one takes up the slack. But that doesn't appear to have happened.
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Changed one of mine before COVID to Vanguard Target Retirement 2055 Fund so that will look after itself. It took a huge dip during and after COVID but it's back to positive now. Without checking I think it's still 100% equity but my understand the closer I get to retirement it'll auto adjust. I pay a small amount a month into this one.
I also have a Scottish Widow workplace pension which I put 8% into, plus a bit that work put in.
Anytime I check in ahead for my age based on averages so I feel okay about that.
I also have a Scottish Widow workplace pension which I put 8% into, plus a bit that work put in.
Anytime I check in ahead for my age based on averages so I feel okay about that.
That's the theory, unfortunately we've ended up in a situation lately where gov bonds have been crushed by low interest rates for years and then the sudden leap in rates has trashed the market for the existing low interest rate bonds. But that's not to say that it will be the case again next time. There's still a good rationale to having high quality bonds (government, not corporate) but the recent performance has been really bleak, so you might still be right having 20%. It's not so much that you won't lose 90%, it's that if equities drop by 50% and that's your whole portfolio you have to stomach the 50% paper loss. If equities drop by 50%, but your portfolio was 50% bonds (and assume bonds flatlined), you'd only be down 25% - and if that's enough to stop you panicking and cashing in, arguably it was worth the years where you didn't gain so much.
If you're really interested, I'd strongly recommend getting a copy of Smarter Investing by Tim Hale. I'm a total nerd about this stuff, so read constantly on the topic, but that's about the best summation I've come across and a really good primer. From my perspective, it's worth really getting to grips with this stuff if it can shave years off your retirement age, but a lot of people just aren't motivated by it, which is fair enough.
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Soldato
Here is the factsheet for the AGN BLK 50/50 Glob Eq Idx (BLK).
Obviously the last 5 years has been extremely volatile, so that performance data is all over the place. But, the fund has tracked its benchmark, which is what it's supposed to do I guess.
looking at the selector break down, I suspect that global equity is heavy biased to the uk. Simply because of the weight that the financial and IT selector has... if it was weighted to the global, the IT selector will be much more and there be much less in financial.