Pension Contribution Distribution

inflationiscoming

Investing in a stakeholder pension. Around 35 years to retirement. I currently distribute my monthly pension contributions as follows:

40% UK equity
30% overseas equity mixture of developed and emerging
30% property

With such a long-time horizon, is this a reasonable distribution or is it worth investing a percentage in bonds?

Distribution of funds already invested:

30% UK equity
60% overseas equity mixture of developed and emerging
10% property

I can provider more info if required

dunstonh

With a stakeholder pension and it's limited choice of basic funds, you are often better off just investing in the balanced managed fund or cautious managed fund depending on your risk profile. That gives you a controlled spread across the asset classes and is automatically rebalanced. Many balanced funds utilise the funds in their range (and sometimes funds not normally available in a stakeholder). It wont be the best option, it wont be the worst. However, you dont use a stakeholder to have the best options.

inflationiscoming

thanks. my options are:

BlackRock Aquila (60:40) Global Equity Index
BlackRock Aquila UK Equity Index
Prudential Cash
Prudential Corporate Bond
Prudential Discretionary
Prudential Index-Linked
Prudential Long Term Growth
Prudential Overseas Equity Passive
Prudential Property
Prudential UK Smaller Companies
Standard Life Investments Ethical
Standard Life Investments UK Equity Select

so I have to balance myself. Happy with high risk

jamesd

If you want more options just move the money to a non-stakeholder pension.

Of those options and given your age I'm inclined to suggest:

60% Prudential Overseas Equity Passive (a world except UK index tracker with low emerging markets component)
20% BlackRock Aquila UK Equity Index
5% Prudential UK Smaller Companies
5% Prudential Corporate Bond
10% Prudential Property

The massive limitation of this is the low emerging markets component for someone of your age.

This would have a moderately high volatility/risk/up and down movement level. If you want to reduce the up and down moves you'd reduce the first two and increase the last two. If you want to increase it, start by reducing property to 5% and increase UK Smaller Companies to 10%.

But with a high risk target you really need a better selection to be able to use that risk tolerance.

inflationiscoming

I can supplement the pension with an emerging market fund or investment trust, through an ISA. What proportion of contribution / investment should I maintain for the emerging markets component?

jamesd

Depends on risk tolerance. Perhaps 20% or more with a high risk tolerance and long time to go. Depends how much you might also have in specialist funds like natural resources or regional funds like Asia-Pacific or Latin America.