Very worried over performance of Tracker ISA

hopper8

I have been using a UK index tracker for my pension plans for approx 6 years but over the last 6 months but it has dropped over £3500 !
As you can imagine this has came as a big shock.
Would you recommend staying with it ,or investing elsewhere ?
My main worry is not just for now but in 10 years time when I may look to retire, there is a similar situation only my loss would be far greater.

Peter

cheerfulcat

Hi, Peter,

Well, it's a tracker - it will track the index, up and down...trackers are fine for regular investment IMO but not so good for lump sums. Also, if this is your only investment it is very narrowly focused, which adds to the risk - best to have a selection of funds covering different areas.

hopper8

cheerfulcat wrote: »

Hi, Peter,

Well, it's a tracker - it will track the index, up and down...trackers are fine for regular investment IMO but not so good for lump sums. Also, if this is your only investment it is very narrowly focused, which adds to the risk - best to have a selection of funds covering different areas.

It isn't my only investment and isn't a lump sum I pay in £200 per month !

cheerfulcat

Well in that case it could be argued that you are getting more units for your money! It's my personal opinion that over the long term, and starting from a fairly low point ( bearing in mind that it could go lower still ), equities will still prove to be a better place to be than cash, especially if inflation takes off.

tradetime

I'd be inclined to echo cheerfulcat's response, it shouldn't really have been that much of a shock market trackers track markets, the whole financial market has been hammered, unless of course the shock you are referring to is the whole financial market.
If you have the risk appetite, we have come a long way and I believe the downside is fairly limited here, this leg should imho give us an intermediate bottom. (Mind you I didn't expect this move to start until April, so view that accordingly) If retirement is about ten years away I think you should be looking to pair your risk if you have not already done so.

a7man

£3500 means nothing...what is the percentage loss? As its in a pension and you are still a fair way from retirement then it is likely to recover the majority of its losses. However, there are better funds out there and you should ideally diversify into other areas.

As you approach retirement the assets invested in should change into lower risk bonds & Fixed Interest, Cash etc. This can be done automatically via lifestyling or you can do it yourself or get an IFA to do it for you.

hopper8

tradetime wrote: »

I'd be inclined to echo cheerfulcat's response, it shouldn't really have been that much of a shock market trackers track markets, the whole financial market has been hammered, unless of course the shock you are referring to is the whole financial market.
If you have the risk appetite, we have come a long way and I believe the downside is fairly limited here, this leg should imho give us an intermediate bottom. (Mind you I didn't expect this move to start until April, so view that accordingly) If retirement is about ten years away I think you should be looking to pair your risk if you have not already done so.

what do you mean by "pair your risk" ?

dunstonh

The loss that has occured so far is similar in size to the one that occured 8 years ago. So, it shouldnt have been unexpected.

Trackers (assuming FTSE as you dont say) are medium/high risk investments. This is what investing in medium/high risk does. Losses of this size whilst not desirable do happen and you plan for them by making sure you dont invest all your money in that place and you know that it can go down as well as up.

on the other hand, your monthly payments are now buying units much cheaper so whilst it could still go down more there is the potential for these current payments to make the most returns. No-one knows when it will bottom out. It could be today, it could be 6 months or 18 months. This is where monthly payments and a long timescale before you need the money really come into play.

Also, diversification and rebalancing are key too. Single fund investing isnt going to benefit from that.