Comments on my Investment Choices?

RichyRich

Good Evening.

I recently joined my employer's Pension Scheme. The scheme is a Group SIPP operated by Hargreaves Lansdowne on behalf of my employer. I contribute 6% and my employer matches that. I'm 22.

The scheme gives the option of a "Default Fund" which in this case is the Schroder Managed Balanced Fund. I am very skeptical of this and believe that HL may have picked this fund as it is cheap/easy to manage rather than for its suitability for retirement savers.

Therefore, I picked some of my own funds based on those in the brochure, and think I have made a reasonable choice based on my risk/reward profile. Given my reasonably young (!) age, I think this warrants a higher level of risk to maximize potential returns over the longer term.

However, as you can probably tell, I am NOT a pensions or investments expert. Therefore, whilst I accept that "advice" cannot be given as such, I'd welcome comments on the following portfolio given the above info:-

15.00% Artemis European Growth Fund
15.00% First State Asia Pacific Leaders
07.50% Invesco Perpetual Income
22.50% JPMorgan Natural Resources
15.00% NewStar European Growth
25.00% Schroder Managed Balanced

Thanks in advance
Richard

EdInvestor

Why 2 European growth funds? For a fairly high risk profile I would subsitute one for either an emerging markets fund or a UK small companies fund. IMHO 22.5% is too high a weighting for the JPM fund, albeit commodities/oil is the fashion at the moment. Rather, I would give IP income a bigger weighting as it is an excellent fund with a long term proven track record. .

Also be aware that with such a strong bias to overseas funds, you are more than normally exposed to currency risk.

RichyRich

Thanks Ed.

My calculations were based on the performance of the funds over the past 5 years as documented in the investment pack; JPM Natural Resources got such a high proportion as they by far outperformed all the other funds over that period; IP Income less so.

The reason for the two European Growth funds is based solely on their relative performance over the last 5 years.

Would you suggest I had about the "right" number of funds, or too many, or two few? I know the number of investment options in SIPPs is almost infinite, but I do not wish to complicate things unnecessarily.

What are people's thoughts on the Schroder Managed Balanced Fund?

Cheers
Rich

jon3001

RichyRich wrote: »

The scheme gives the option of a "Default Fund" which in this case is the Schroder Managed Balanced Fund. I am very skeptical of this and believe that HL may have picked this fund as it is cheap/easy to manage rather than for its suitability for retirement savers.

Short term I'd at least go with a default option while you investigate what it means to build a portfolio. It may take 12 months or more of reading and research. It usually involves thinking in terms of asset classes rather than funds. As Ed points out, you're choosing two European equity funds which represent the same asset class.

This is a good start:
http://www.investorsolutions.com/v2content/book/index.cfm

Other books I'd recommend:

The Four Pillars of Investing William J. Bernstein
http://books.google.co.uk/books?id=I0iO2stKO7kC&dq=0071385290

The Intelligent Asset Allocator William J. Bernstein
http://books.google.co.uk/books?id=JmcQVbCcu0IC&dq=0071362363

Asset Allocation Roger C. Gibson
http://books.google.co.uk/books?id=q80oFFsiI3kC&dq=0071478094

jon3001

EdInvestor wrote: »

IMHO 22.5% is too high a weighting for the JPM fund, albeit commodities/oil is the fashion at the moment.

Gibson's multi-asset class portfolios top out at a 20% allocation for commodities for good diversification. However he was investigating commodity futures as a distinct asset class from stocks.

Maybe a good weighting on the Marlborough fund would be more beneficial.
http://www.h-l.co.uk/funds/security_details/sedol/B195JD8