Pension fund performance - do you monitor yours, how is it doing, do you actively change it?
- Thread starter danlightbulb
- Start date
currently transferring out doesn;t look a good option
When you are comparing, the last 5 years includes a massive money printing pump during and after covid which has benefitted those 7 tech stocks a lot.
Ive continued analysing my available funds.
Here are the top 10 funds in my scheme over the past 5 years:
Note that only the top 7 funds have achieved over 10% p.a average returns. Are claims of consistent above 10% returns therefore a bit overstated? Especially in a balanced portfolio - which none of the top 10 funds by themselves are.
Edit to add - when I looked at this in October 2020, 23 funds had achieved more than 10% growth over 5 years as an average. So performance this time is down compared to back then. Does this suggest equities are starting to struggle?
30% of my portfolio is in fund 9 on this list, which did well so that's good. But the other 70% is way down the list in a fund in 41st place, this is because that fund is mixed assets and also contains bonds/gilts as well as equities with a higher proportion of UK equities.
Question is though whether bonds/gilts will start to come good again, theory is they should if interest rates start to fall.
A video I watched last night said that all of the global funds are deriving their growth mainly from US equities, and even more than that, the US market is deriving most of its growth from just 7 big technology companies.
The top fund on that list is badged as an islamic fund (sharia compliant) but on inspection it still contains the same big 7 US companies as other equities funds do. So not sure why its done better and whether that will continue.
I did a risk ranking on myself and watched a few videos on it. Out of four categories 'cautious' 'balanced' 'growth' and 'adventurous' I landed between balanced and growth. The video then said to go up a category if you're investing for 11+ years like I still am in my pension scheme. So that would put me in the growth category.
So on this basis my investment choices might need to be more biased towards the higher risk categories than they currently are.
Any investors have views on bonds/gilts please? Ive read some articles that seem to suggest it could be a good time for bonds soon, assuming interest rates have indeed peaked. I looked back at the data I'd collated from my scheme and indeed prior to 2020 the bond funds did reasonably well, 7-10% p.a average returns. That wasn't as good as equity, but if equity struggles then 10% on bonds would be nice.
So this is indicating to me I should retain some exposure to bonds in my portfolio.
But the performance of equities despite the economic conditions we have faced lately suggests going harder on equities is better.
There is a risk that if I drop the bonds now and equities underperform then Ive lost out. Or I could stick with some bonds and if equities (especially in the US) continues to do well, and Ive lost out.
So this is indicating to me I should retain some exposure to bonds in my portfolio.
But the performance of equities despite the economic conditions we have faced lately suggests going harder on equities is better.
There is a risk that if I drop the bonds now and equities underperform then Ive lost out. Or I could stick with some bonds and if equities (especially in the US) continues to do well, and Ive lost out.
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Im not - I have 20% bonds now as this was what was considered diversified when I evaluated things in 2020. If I keep them, I keep them for a few more years at least. Just not sure what the reason is to keep them or not. The traditional view is they offset poorer equity performance.
Some articles online suggesting bonds valuable part of portfolio still. But then look at how many people have replied here and said they are all in global equity funds.
Caporegime
I only got started with a proper pension back in 2016
84% of portfolio - Blackrock Consensus 85 (+26%)
9% of portfolio - Vanguard LifeStrategy 80% Equity (+9%)
7% of portfolio - WS Lindsell Train UK Equity (+47%)
Currently my monthly contributions (+ company match) is split 80/20 for Blackrock/Vanguard, no idea if that is good or not, but given all my stuff is up in totality (plus the company contribution being free money), I think things are ok for now.
84% of portfolio - Blackrock Consensus 85 (+26%)
9% of portfolio - Vanguard LifeStrategy 80% Equity (+9%)
7% of portfolio - WS Lindsell Train UK Equity (+47%)
Currently my monthly contributions (+ company match) is split 80/20 for Blackrock/Vanguard, no idea if that is good or not, but given all my stuff is up in totality (plus the company contribution being free money), I think things are ok for now.
Associate
Yes, a few years back I dumped all of my pension funds (like yours, madly UK overweighted and not enough equity) into a SIPP and went 100% VUSA (Vanguard S&P 500 tracker). It's done very well.
As I get older I will gradually switch from equity to bonds etc.
I have zero faith in the UK stock market, we've had stagnant productivity gains for years now. Yes some have overseas earnings but still... USA has broadly the best companies in the world, specifically big tech which has the biggest room for growth. If there's any sign of the US losing it's huge advantage I'd switch to VWRL (Vanguard global tracker). Keeping it simple, no need to get bogged down in funds or specific stocks, that's what play money's for.
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Thanks for your input. You wouldn't be able to call that a diversified portfolio though would you, by any scale, 100% US equities would be considered very high risk.
Associate
That's my concern with my current choice. It is high risk. That said I don't know what risk level the original fund I was put into was, which was L&G PMC 2040 - 2045 Target Date Fund 3. Many don't mess with what they're pension is invested in and just trust L&G have put their money in the best place. All I can see from the original one is that nearing the forecast retirement date they'll change from higher risk investments to stable investments like bonds etc.
I never know what to do for the best. All my eggs are in one basket currently so it's probably not ideal. My current fund is heavily invested in the US market so I'd be in the same boat.
honestly - Forget trying to "best guess" the markets.
Shove it in some funds, leave it alone. Don't try and chase sectors etc.
Chasing sectors/bonds/gilts/equities/overseas/US/Far east etc - never going to work. Let something like Vanguard lifestrategy do the job for you. Or any other alike fund. Never the best, never the worst, right in the middle - doing it's job.
Unless you have in excess of say £250k in your pension fund, pick some funds, monitor it, leave it alone.
Yeah my dilemma too - its very difficult to know what to do.
On the equities side, it seems a reasonably easy choice - a global passive index fund (which would automatically be heavy in US tech stocks anyway, as that's the natural balance of world equity).
However the issue seems to be around what proportion of bonds, if any, I include in my portfolio. Bonds were meant to be safe/stable, clearly that's not been true lately. And they offer lower growth than equities.
Traditional default funds are clearly not making the best choices for people either, so can't just stick with default.
Im not trying to second guess markets. The split between equities/bonds is a pretty critical decision point is it not? Deciding what level of risk to take is a fundamental part of this, is it not? Why would I delegate that decision to a third party fund that is designed for pension investors who are happy to leave everything in their default funds and get sub-optimal returns?
Associate
That's how I felt. I'm 45 currently. I'll roll the dice, take the higher risk for now. Maybe until I'm 55 and at that point dump it back into a fund that is more stable and will invest accordingly then.
None of my equity or multi asset funds have specific gold exposure. Is it worth adding in a specific gold exposure fund at say 3% of portfolio? The single gold fund I have access to is ranked 2nd best performer over 5 years.
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Your attitude to risk is the main thing - then pick a fund/funds that line up with that.
Do a online risk profiler - pick 1/2/3/4 funds that match your current attitude to risk.
There are 100's of "risk targeted" funds that do the heavy lifting for you. If your an 8/10 risk, then your funds are likely to have 80% equities to 20% debt/bonds.... Similar 6/10 is generally 60/40% split.
Obviously age/time to retirement also need factored in, it your 20/30 years from retirement, take more risk.
Size of fund - again - don't think you need 10/15 funds if your pension fund is 50k.
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Again - size of fund? Is it worth it?
If your fund is £50k, 3% is £1500... Don't bother.
Gold funds tend to be massively high risk....as they are single sector/single commodity
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Done that. I am in or around the growth/adventurous category. That would be around an 8/10 I would say. Which is ok, Im 25 years out from retirement.
Which I don't have access to in my scheme, hence me having to pick from a selection of funds to get the equity/bond and UK/overseas balance I should have.
For example, I cannot select a single fund that represents worldwide equity. I can select for example a 70/30 equity fund, which is 70% global and 30% UK. So to get that UK proportion down I would then need a second fund ex-UK to get the mix right.
The 'balanced' funds all have a high proportion of UK equities too. Hence if I want bonds, I either need to select multiple funds to get the mix right or choose some specific bonds funds with no equities in them.
£130k. Up from £84k in 2020 when I did my last configuration change.
Yes its a 7/7 on the risk scale, but over the past 7 years has been placed 1st or 2nd on the ranking out of all the funds. Will that continue, who knows - question is should I be in it?
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