Friends Provident - Pension Allocation

nnop

I currently have a Friends Provident Stakeholder Pension.

A questions for input please?

I am 38 years young and looking for a (Medium +) risk holding as I have an S&S ISA which is on the risky side.

What do you think of my allocation as it stands today?

Balanced Index Enhanced Fund of Funds (5%)
CIF Euro Bond (10%)
CIF European Equity Investors (5%)
CIF Global High Yield (10%)
UK Equity (15)
Managed (35%)
Overseas (10%)
Pacific Basin (10%)

Many thanks.

dunstonh

what strategy are you following or is that a random selection?
what do you mean by medium risk? (i.e. how much would the fund value have to drop before you got cold feet?)

nnop

Thanks for the reply dunstonh.....

I guess you would call it a random selection rather than a model I am following. Trying to keep Equities approx 80% Bonds approx 20%

My hope is for a diverse portfolio that covers a broad range of areas, overseas, UK, bonds etc...

As for risk, I watched my S&S Isa plummet 50% in value last year and kept my nerve and it has bounced back recenly so my nerve is OK.

For my pension however I want somthing a little more robust in a normal market therefore would not worry and loose sleep for a 30% swing over the short term.

Hope this helps.

dunstonh

50% puts you around medium/high. 30% is more around medium. So you are where you want to be. 80/20 should be fine for medium when you consider your age and its regular contributions as well.

Avoid the balanced managed funds and similar. They control the asset allocation and are really meant as 100% options or very limited selection. If you want to build the portfolio then look at the sectors. Such as UK, Europe, Far East, US etc. Make sure you have fingers in every region as they will all perform differently at different times. And remember to rebalance it periodically. Over time, it will go out of sync and can push you up the risk scale without you realising it.

bendix

Dunstonh's point about reallocating regularly is spot on - it should probably be reviewed every six months at a minimum.

Also, there is one thing you need to consider on the overseas funds and that's the impact of currency. You not only have the asset class risk, but also currency. If the pound is strenghtening, you might find any asset class rises wiped out by sterling. The opposite is also true of course.

I'm not advocating having no overseas component. On the contrary. My own portfolio of both pension and other investments is heavily geared to overseas stocks (mainly) and bonds. But it's another thing you need to think about.

nnop

Thanks Dunstonh and Bendix for your helpful input...

One other question, I am not invested in Property, is it a good time to start?

Lokolo

Do you have a house? If so why invest anymore into property?

nnop

Yes, I have a house. But was thinking more on the lines of adding maybe 5% to property fund in my pension while prices an not high?

EdInvestor

Lokolo wrote: »

Do you have a house? If so why invest anymore into property?

Pension funds invest in commercial property which is a different asset class from residential property.

The commercial property market is currently limping along the bottom value wise but continues to generate solid income. Not a bad time to buy as long as you have patience, IMHO.