Is this reasonable for medium/high risk?

Mortgage_&_debt_free

Hi all

I am currently looking to regig my investments. I have most of the money in Standard Life's Balanced Managed through my LGPS AVC fund & a small amount in a few ISA funds, but I want to diversify to increase growth. I think I probably have a medium/high risk profile as I regard my final salary pension as a core retirement holding, so I can take risk with other funds.

However, I was thinking of leaving some in the balanced managed fund to act as a near tracker/core holding. Historically it has beaten the FTSE all-share but the trend graph mirrors the all-share, so I am regarding it as a closet tracker, with the advantage that it is managed so won't automatically follow the market endlessly if things go pear shaped, and is lower risk than the other funds so may add some balance to volatility.

I am investing in both AVC because of the real benefits it offers re taking up to 100% of the AVC tax free, and want to increase the ISA in case they move the LGPS/AVC goalposts down the line.

I would appreciate any comments on the following, particularly if the total profile is over/under weight/strange in particular areas;

Funds
European 13% Artemis Euro Grwth & Gartmore Euro Sel Opps Fund
Global Growth 6% Fidelity Global Special Situations
N. America 6% GAM North American Growth
Asia excl. Japan 6% First State Invts Greater China Growth
UK all Co's 22% Fidelity Spec Sits & Schroder UK Mid 250
UK Equity Inc. 19% Invsco Perp High Inc & Stnd Life UK Eq High Inc
UK Small Co's 10% Standard Life UK Smaller Companies
Balanced Managed 18% Standard Life Pension Managed One Fund

Any comments anyone has on the funds or profile would be most welcome.

I am thinking of putting a couple of lump sums in very soon but am not sure if I need to increase the weighting in any particular area or if maybe there's an obvious sector I haven't included?

Thanks in advance for any suggestions.

EdInvestor

I wouldn't bother with the Balanced Managed, you've already got that area covered via the other UK equity funds.Suggest you split that chunk between a property fund and a commodities fund (eg JPM Nat resources) .

I would also suggest you check the portfolio turnover of all the funds, the foreign ones in particular, bearing in mind that PT of 100% adds a 1% load to the fund - which will almost double what you are paying in AMC.

Given that over 25 years a 1% annual fee will eat up 25% of your fund, these charges are very significant and sometimes can be much higher on foreign funds.Given the foreign funds also expose you to foreign exchange risk, there is an argument they are not worth the bother.

Mortgage_&_debt_free

Thanks Ed, most useful.

How can I check the PT of a fund?
I tend to use HL website and can't see any mention of the PT

Thanks

EdInvestor

Should be in the key features document - or in the fund particulars on the provider's website. They like to keep the info out of public view if they can, not surprisingly

The Invesco Perp Income fund is at the low end, around 40% last time I looked.

Mortgage_&_debt_free

Would it come under "other expenses" e.g.
Charges & savings
Initial charge 5.00% Initial saving 4.75%
Annual charge 1.50% Annual saving 0.25%
Other expenses 0.33% Total expense 1.83%

dunstonh

Don't get carried away with PT. This is Eds currently negative issue towards funds and its driving all her posts whether it is relevant or not.

However, I was thinking of leaving some in the balanced managed fund to act as a near tracker/core holding.

Jack of all trades, master of none fund. I wouldn't bother with it. If you like the idea of the balanced managed spread, then find out how much it has in UK, Europe, Global, Property etc and pick standalone funds to match the percentages. More often than not, those standalone funds would beat the balanced managed fund over the long term.

You are missing Property, Japan, Emerging markets and Specialist in your spread.

Mortgage_&_debt_free

Hi dunstonh, I hoped you would be coming to the party!

I have done the analysis of the contents of the balanced managed fund, which are;

United Kingdom 63.8%
North America 11.0%
Western Europe - Euro 10.2%
Japan 5.1%
Asia 4 Tigers 3.6%
Western Europe - Non-Euro 3.4%
Australasia 1.5%
Emerging Asia - Ex 4 Tigers 0.5%
Central & Latin America 0.4%
Middle East/Africa 0.3%
Emerging Eastern Europe 0.3%

When added to the others the current overall profile of £ is (I think!)
Europe excluding UK 16%
North America 3%
Far East exc Japan 1%
Global 4%
Japan 1%
UK Funds 74%

The above is as it is becasue I have only recently split the BM fund and am thinking of future investments at the rates shown at the beginning of my post.
Any comments, and am I right in thinking although some of the areas you mentioned are missing that are in the BM fund (Emerging & Japan), they are negligible in terms of % to make a real difference to the profile?

dunstonh

You of course arent helped by the fund range limiting what is available. I did a review of a group personal pension with SL for somoene recently and found that the SL fund range that was available (as group schemes usually restrict funds) had tons of different UK sector funds but limited in other areas.

You may find the global emerging or specialist funds are just not available to you. Of your overall spread even 1-2% of your pension portfolio is still worth it. Especially if you are going to rebalance it once a year. It is those funds that are most volatilie and great in a rebalancing portfolio.

EdInvestor

Mortgage_&_debt_free wrote:

Would it come under "other expenses" e.g.
Charges & savings
Initial charge 5.00% Initial saving 4.75%
Annual charge 1.50% Annual saving 0.25%
Other expenses 0.33% Total expense 1.83%

If you go to the end of this example Key features document from the Pru, you will see that Appendix B lists the Portfolio Turnover Rate for all the funds they offer ( remember 100% turnover =1% extra charge).

In Appendix C, the other charges are listed.These are grouped under the TER (total expoense ratio) and usually are made up of the annual charge, initial charge and "other expenses" - mainly custody and legal fees.

http://www.pru.co.uk/content/acrobat/UNIK6334.pdf

EdInvestor

The PTR for the Artemis European Growth fund ought to be at the end of this link:

http://www.artemisonline.co.uk/pdf/app_forms/UTappsKFTC.pdf

Mortgage_&_debt_free

dunstonh wrote:

You of course arent helped by the fund range limiting what is available. I did a review of a group personal pension with SL for somoene recently and found that the SL fund range that was available (as group schemes usually restrict funds) had tons of different UK sector funds but limited in other areas.

You may find the global emerging or specialist funds are just not available to you. Of your overall spread even 1-2% of your pension portfolio is still worth it. Especially if you are going to rebalance it once a year. It is those funds that are most volatilie and great in a rebalancing portfolio.

I agree that the funds SL are limited but I can access some others e.g. Gartmore through the SL AVC. I can also access Clerical Med as an AVC but for weeks now their website has not been working properly and isn't displaying what's on offer. Would you happen to know anywhere I could access the list of CM funds available as a group pension/AVC?

Anyway, if I can't get the funds via my AVC I will get them as part of my S&S ISA, as I need to build this element up just in case the LGPS plays silly !!!!!!s in a few years and I want access to some capital.

I am thinking of investing a couple of one off (minimum - £500-£1000) sums to rebalance e.g. First State Global Resources, Allianz BRIC, & Aberdeen Emerging Markets, Schroders Tokyo.

Would these funds do the trick? I tend to pick from Hargreaves Lansdowns Wealth 150 to try and minimise the chances of picking a real dog.

Any comments?