Sipp Pension Portfolio - What do you think?

Hi Phil,
You have some nice funds there but I'm not sure that they all sit together too well. HL are a great firm to use if choosing your own investments, sure there are cheaper alternatives but not so many who are consistently delivering excellent customer service in my experience.

So here are my 10 choices:
Global Emerging Mkts funds:

First State Asia Pacific Leaders Class A Accumulation Units

I have this fund also, it has proven to be less volatile than some alternatives but doesn't race ahead as fast when markets climb. I continue to add to this fund each month.

Cautious Managed Funds:
Invesco Perpetual Distribution Fund Accumulation Shares

Not for me, I much prefer something like Troy Trojan in the managed sectors.

Uk Smaller Companies:
Marlborough Special Situations

Always fancied buying this one but would only stick 5-10% in it at most. I don't expect to be buying this in the short term but may take another look at it in the future.

Specialist funds:
BlackRock Gold & General Income Units

I don't really see the point in buying this as Gold has done so well, I read that it remains under valued but I don't know. I believe the fund has done well but I let my managed sector choice (Troy) take the strain at deciding how much gold to hold.

Absolute Return:
Newton Real Return Fund Class A Income Units
CF Miton Special Situations Portfolio A Accumulation

I find funds in this sector over-priced poor performers and wouldn't touch them with a barge pole. Again, I see no need for these if you hold a decent managed decor fund compatible with your level of risk.

Corporate Bonds:
M&G Strategic Corporate Bond Class X Income
Fidelity Moneybuilder Income Income Shares

Both decent funds but do you need 2 unless you have a lot of exposure to this sector. You may be wise to grow your bond allocation later in life, I did hold Artemis and M&G Strategic Bond funds but currently hold none other than the bond allocation in other funds.

Passive:
HSBC FTSE 250 Index Income Units
HSBC Pacific Index Accumulation Units

This seems to me to be a mix of strategies, why do you want these funds if you are going for the more active funds above? Perhaps you are using these as core funds with smaller holdings of the above? I think that perhaps you need to add some percentage splits so that we can see a better picture of the portfolio make up.

It may be worthwhile using Trustnet or Morningstar to analyse your intended portfolio and get a good picture of where the money is going compared to where you think that it is going, for example is the Asia or Emerging Mkts % as high as you think?

I wish you well, hope the above helps a little.
Mickey

I'm surprised HL would charge more than an IFA as surely an IFA would do more, but I guess HL are attractive with no upfront fees/lots of choice of investment.

HL retail a product that pays them 0.5% a year (in most cases). They also get paid a hidden commission of around 0.25% (varies with fund). So, by offering the product they do, they get around 0.75%. Its a big money maker for them.

An IFA can retail pensions with charges as low as 0.2% p.a. However, you will pay a fee up front to cover the advice and setting up. For small funds, it isnt worth it in the short term. However, for large funds, it can be as the breakeven point can happen after just a few year years.

Also, take the Trojan fund mentioned higher up on this thread. HL retail the I version which has a TER of 1.56%. IFAs can retail the O version which has 1.06% TER. In some cases, HL can be cheaper, in some cases an IFA.

Passive funds do seem a cheap option, so it was my thinking I could bring the costs down using these.

Until you get to around £10k, you may as well. Until the fund is big enough, the difference in the returns actually has little impact in the scheme of things. For example, £100pm into the HSBC 250 fund over 10 years returned £18,571 with the pacific giving £20,992. Yet it took 7 years for them to really start to separate with any meaningful value. For example, had you started in Oct 2001 with £100pm into each fund, the value of the funds would have been identical in July 2007. It was when the funds started to get towards £10k that the differences started to show.

I am a little concerned of talk of a double dip recession, and wonder if now is the time to start with these particular investments.

You do realise that nearly every decade there is a recession. The events like this are not the first and will not be the last. Most recessions are W in shape (even if the second wave doesnt actually make it into recession, the recovery shape is often a W).

For long term regular contributions, events like these can be great for long term growth. One of the reasons endowments started to fail was the lack of a significant market drop during the 90s followed by two big ones in the 2000s. All that money paid in during the growth years didnt have those periods where the prices dropped and units were bought cheaper which would then go on to make more when prices rose again. They just went up and up and then down. (there is more to it than that but thats a whole different subject). Regular payments work well in volatile markets. You are not retiring this year or in the next 5. So dont let it worry you.

philrush wrote: »

I am a little concerned of talk of a double dip recession, and wonder if now is the time to start with these particular investments.

So here are my 10 choices:

Absolute Return:

Newton Real Return Fund Class A Income Units
CF Miton Special Situations Portfolio A Accumulation

With 40 years to go until retirement, a double-dip recession in the next few years will tend be insignificant as you are just starting off.

As suggested by Totton, run your funds through a portfolio analyser tool: you might find that you have a high weighting towards bonds with the current selection. Given your timescales you might want to consider a lower weighting in this area.

+++

The CF Miton fund is in the Balanced Managed sector rather than Absolute Return

philrush wrote: »

The Blackrock fund one was one of my least favourites, and seems a gamble to me, in that some people say it will catch up with Gold, others say no, but could pay off.

Everyone has different opinions, so here is another. I can't bring myself to invest in gold directly as it feels expensive, but my own view is that gold miners look cheap provided the gold price stays at this level. Therefore I like the idea of investing in this fund. However personally I selected "Investec Global Gold" instead as the performance is pretty much identical but the charges are a touch lower.

Hi again,
Whilst looking at the Investec fund it may prove worthwhile to also review Blackrock World Mining IT (BRWM), I recently sold out of it but with the recent falls it is back on my 'watch list' for exposure to that sector.

HTH,
Mickey