L&G Global (60:40) Index ?

J_Devon

Good evening...

We have a money purchase pension scheme running in work. When I signed up to this pension we were given several investment types to choose from (all various L&G ones). Given that I had no clue of what these types were at the time (and still don't) I vaguely remember ticking a box, as most people did, to let them decide.

Having looked at my pension statement online in work a couple of days ago I noticed that the contributions being paid by myself and my employer (5% + 5%) are being invested in the L&G Global (60:40) Index....To keep this post simple, whats this all about? I know nothing about pensions but I'm keen to know where my money is going and if I'm wasting my time with this.

Any help would be much appreciated.

J :cool:

Lokolo

60:40 means it invests 60% in UK and 40% elsewhere in the Globe.

http://lt.morningstar.com/lc4pd0x6ai/snapshotpdf/default.aspx?SecurityToken=VAUSA05RQ8]9]1]SAGBR$$PSA_160

Thats the fund factsheet if you want to have a read.

It seems to do well against its Index when growing but over 2008 lost 25% (other funds lost a lot more though) compared to 7% in the index. Would suggest its a higher risk fund (although saying that it does invest 20% in financial services *doh* so I would imagine thats why!)

Not sure what else I can comment on... over to you Dunston (and Ed if you're about)

J_Devon

Ah fantastic, thanks for link Lokolo. It seems that it's invested in a large amount of different sectors & services etc. I assume thats a good thing? Eggs in one basket and all that...?

Lokolo

Yes that is true. Although I think putting 60% in UK is quite risky! (but it does depend on risk profile).

dunstonh

Its a simple fund designed for simple investing over the long term. It wont be the best, it wont be the worst. Its medium/high risk in isolation but the overall risk will depend on the term. (5 years to go retirement and its high high risk. 50 years and its lower)

J_Devon

Thanks dunstoneh...I'm 27 so have 41 years until retirement so I guess this is in my favour.

jamesd

If you're interested in paying once a year attention to the investments you can probably do better. If you want to ignore it, this is a decent way to go. If you can handle ups and downs it wouldn't be a bad idea to have say 20% emerging markets as well as this one.

J_Devon

Yeah I plan to totally ignore it to be honest. I only really checked as we received an email in work saying a statement was available if we wanted to see it, so I thought I would.

Obviously given the current economic climate, its worth less now than what I've paid into it, but given its over 40 years until I retire, I'm not worried (yet).

jamesd

Honest is good in this case - means you'll get something suitable. What you have is fine for someone who will mostly ignore it.

MrMicawber_2

Lokolo wrote: »

It seems to do well against its Index when growing but over 2008 lost 25% (other funds lost a lot more though) compared to 7% in the index. Would suggest its a higher risk fund (although saying that it does invest 20% in financial services *doh* so I would imagine thats why!)
quote]

I don't quite understand how an indexed fund could drop in value 18% more than the indexes it is following - am I missing something?

Lokolo

Picked the wrong companies in the FTSE? If you see what I said later on, a lot of the investments were in the banking and finance sector, which I would assume is more than the FTSE. So if the FTSE had consisted of 10% finance, but the fund consisted of 20%, then the fund would lose more value if the financial sector collapsed (whcih it did)

(this was a little guess but its the only thing I can think of!)