SIPP Ideas

KPaul

Hi,

I'm a newbie to pension investing. I'm mid-40's with almost nothing in the pot so far (argh!). However, my employer is now offering to pay 10% of my gross salary into a SIPP and I'm keen to try and match that from now on. Based on my reading, and a basis in an existing H-L SIPP, here's what I'm thinking seems like a good portfolio for me:

Troy CF Trojan Fund Class 1 Acc 20%
HSBC FTSE 250 Index Units Retail Acc 50%
Jupiter Strategic Bond Acc 10%
Artemis Global Energy Retail GBP Acc 10%
JP Morgan Natural Resources Acc Units 10%

The Troy fund is mixed managed (equities, bonds, gold, etc) and I figure it's a mix of caution and nice historic return (it might of course tank from now on). I've got an index tracker in there and I fancy the mid-caps for potential good growth over the long term - it's a low cost core to the portfolio. I've got what looks like a solid bond element (mainly because everyone seems to think one should have bonds as a key component to ones portfolio). And I've got a couple of riskier specialist funds because I think I need to take a bit more risk than I should for my age if I'm going to stand a chance of having a half decent pot when the time comes. What I don't have is an absolute return fund (like Newton Real Return). I'm also not sure that 10% in 2 riskier funds is a good idea, especially given the TERs. I did look at IT's like City of London but they look dicey right now and anyway their returns don't seem to out-do FTSE 250.

Oh, and I'm happy to take a modertately active interest in my portfolio's performance - checking on it once a month or so and rebalancing from time to time.

I'd be very grateful for and am very open to your opinions (obviosuly not advice) on my thinking here.

Thanks,
KPaul

BLB53

I did look at IT's like City of London but they look dicey right now and anyway their returns don't seem to out-do FTSE 250.

You obviously prefer funds but I would suggest another look at ITs, particularly in the UK Inc & Growth eg City of London, Murray Inc etc and also International Growth & Inc eg my favourite, Murray Intl. I would maybe reduce the HSBC to 25% and replace with these ITs.

KPaul

V interesting. I took another look at IT's and also at some "real return" funds. City of London does track closely to FTSE 250 over the past few years, taking the edge of the lows, but Murray Internat'l has been stellar. Newton Real Return also looks good. Food for thought indeed and I like your ideas; many thanks. I'm going to select in the next couple of days, so any other comments welcome!

competitionscafe

BLB53 wrote: »

You obviously prefer funds but I would suggest another look at ITs, particularly in the UK Inc & Growth eg City of London, Murray Inc etc and also International Growth & Inc eg my favourite, Murray Intl. I would maybe reduce the HSBC to 25% and replace with these ITs.

I am a fan of investment trusts but if you wanted to buy a trust in that sector my concern with some of them is that they are currently trading at a premium. Murray International for example is currently at a 5% premium and over the past year the premium has been as high as 9%. Personally I would look at something with a discount which has the potential to narrow or something for close to NAV (eg: Troy Income and Growth - at a 1% premium)
http://markets.ft.com/research/Markets/Tearsheets/Summary?s=TIGT:LSE

KPaul

Excellent. I'm learning loads! Had no idea what discount/premium on NAV meant but now I do, thanks to a very helpful video on Moneyweek's site. (I can't post the link because I'm a newbie here and we're blocked from posting links.)

I'm going to delay completing the form until I've reserached and understood a bit more about IT's.

Very many thanks, guys

BLB53

Personally I would look at something with a discount which has the potential to narrow or something for close to NAV (eg: Troy Income and Growth - at a 1% premium)

I suggested Murray International to provide more global diversification. Troy Inc & Growth is in the UK Inc & Growth sector, the same as Murray Inc and City of London. Troy has the worst 5 year record on income returns out of all the 19 ITs in its category, also its TER is high at 1.25% (City of London 0.5%, Murray Intl. 0.75%)
So yes, Murray Intl. is at a premium to NAV but there's a good reason - its excellent track record.

BLB53

I'm going to delay completing the form until I've reserached and understood a bit more about IT's.

Here's a good place to start

http://www.theaic.co.uk/

competitionscafe

BLB53 wrote: »

I suggested Murray International to provide more global diversification. Troy Inc & Growth is in the UK Inc & Growth sector, the same as Murray Inc and City of London. Troy has the worst 5 year record on income returns out of all the 19 ITs in its category, also its TER is high at 1.25% (City of London 0.5%, Murray Intl. 0.75%)
So yes, Murray Intl. is at a premium to NAV but there's a good reason - its excellent track record.

Yes fair point, although your other suggestions were all UK Inc & Growth trusts. But yes, Troy TR is high for an IT (one of the rare occasions when the equivalent open ended fund [Trojan Income O version] is better value than the IT). The global example I had in mind was Personal Assets which tends to trade around NAV or a small (1 or 2% premium) although this has a high % invested in UK and US equities and very little in Asia.

According to this though Murray Intl TER is 1.1%
http://ww2.bestinvest.co.uk/funds/fmpro?-db=webprices.fp5&-lay=allfields&-format=factsheet.htm&investment_codename==MYI&-find

The 5 year record on the Troy trust is misleading as it has only existed in it's current name and manager for about 2 years - prior to that it was Glasgow Income Trust.

Personally I am just a bit wary of paying more than a 1% or 2% premium for any trust having seen too many trusts on premiums fall out of favour for whatever reason and the price fall in value even if the underlying investments have not. Whereas I like to pick up good trusts at a discount (eg: Standard Life UK smaller companies when it was at a 10% discount) which can give a nice boost to performance (now trading at just above NAV). Of course the discount doesn't always narrow or disappear like that, especially with the big global trusts so perhaps Murray Int is an example of a trust where the premium may be worth paying? (Especially as there is no equivalent open ended trust - ie: same manager and same/similar porfolio).

competitionscafe

KPaul wrote: »

I'm going to delay completing the form until I've reserached and understood a bit more about IT's.

Good basic introductions here:
http://www.candidmoney.com/investment/investmenttrusts.aspx
http://www.fool.co.uk/Your-Money/guides/Investment-Trusts.aspx
http://www.which.co.uk/money/savings-and-investments/guides/different-types-of-investment/what-are-investment-trusts/

Also on the AIC link above. To check holdings, discounts etc there is:

Best Invest:
http://www.bestinvest.co.uk/investment-research/investment-companies/explained.aspx

Trustnet:
http://www.trustnet.com/Investments/FundsList.aspx?univ=T

FT:
http://markets.ft.com/research/Markets/Tearsheets/Performance?s=LTI:LSE

(Bottom graph shows premium/discount movement over 1/3/5 years)