Anyone fancy critiquing my SIPP?

NickButcher

In addition to a company pension (DC). I have a SIPP, value today around £127K which currently amounts to some 60% of my total pension fund.

I'm 54 and would like to start easing into retirement within the next few years. I have a job in IT in which I could easily find some work as a part-time contractor and my wife, who will continue to work for some time, is the main bread-winner (by an order of magnitude), so plan to load-up our ISAs with incremental withdrawals of the tax-free cash and start drawing-down whatever we need to fill-in the gaps if we need some extra income.

Based on the above, I have a fairly relaxed attitude to risk - if it doubled overnight, happy days I'll retire ASAP - if it all went a bit pear-shaped, I'll have to carry-on working for a while.

Would anyone care to critique the contents of my SIPP?:

Stock / Holding %

---

Insynergy Odey Fund Accumulation units 12.2%
Apple 8.7%
First State Global Emerging Mkt Leaders Class A Accumulation 8.0%
GlaxoSmithKline 7.9%
British American Tobacco 7.7%
M&G American Class X Income 6.9%
Cash 4.8%
Prudential 4.8%
Tesco 4.5%
GLG Technology Equity Fund Retail Accumulation 4.3%
Aberdeen Latin American Equity Class A Accumulation 4.1%
Standard Life Inv Global Smaller Companies Retail Accumulation 4.0%
Vodafone 3.9%
Xstrata 3.6%
BT Group 3.4%
Land Securities Group 2.9%
Neptune Global Equity Class A Retail Accumulation 1.6%
Supergroup 1.2%
Sainsbury 1.2%
Compass Group 1.0%
GKN 0.9%
Telefonica 0.8%
Man Group 0.8%
Camco International 0.4%
Lloyds Banking Group 0.3%

Anyone see any howlers or glaring holes in the above?

Neverland

I would generally be looking to allocate a % equal to my age in fixed income to reduce the risk and generate an income

So by that reckoning you have way too much exposure to equity

I don't think all those tech holdings and the accumilation funds are going to give an income for semi-retirement either

Is it really worth having all those little holdings of just £1-2,000?

Mind you, what is your DC fund and your wife's pension in?

NickButcher

Sorry, should have been a bit clearer. I'll be switching to more income-generating equities/funds when I decide to start taking money out. At the moment I'm looking for growth.

My company scheme is in the L&G 50:50 UK/Global Equity Fund at the moment but there are half-a-dozen funds of varying risks to switch between. I would look to consolidate that pot with my SIPP when I leave the company.

My wife's pension is all in equities and doesn't amount to much at the moment, but she's only 40.

Linton

The main omission I feel is the lack of a strategy - sorry to be a little brutal but...

IMHO in constructing a portfolio one should start with an objective identifying the aim in terms of return and timescale and the risk management requirement(if any). Then one can specify a strategy - eg what sectors to invest in and in what proportions. Given that one can identify specific investments.

Looking at your list I havent been able to construct the objective/strategy that might lead to the investments you list. This may well be my lack of insight and you do have these; if so many apologies.

Onto specifics....

From a quick calaculation you would seem to have 45% in UK large companies, 20% in US (tech is mainly US), 18% in Global, 12% in emerging markets. This to me seems far too high in UK shares - do you believe UK large companies is the sector to choose for growth?? If you do then I guess your portfolio is reasonable. But it's not a belief I share.

The big omission in equity would seem to be FarEast/Pacific which is surely a major growth area now and in the future.

And then there is the balance between equity and fixed interest. More or less 100% in equity seems very high. Though I think neverlands suggestion of 50% in fixed interest is too high. If you are planning to go into drawdown then you do need to bear in mind a significant part of your pot wont be touched for say 20 yeras - more than enough to justify a major ongoing holding in growth equity.

Neverland

NickButcher wrote: »

Sorry, should have been a bit clearer. I'll be switching to more income-generating equities/funds when I decide to start taking money out. At the moment I'm looking for growth.

If you are looking for growth you should probably think about increasing your exposure to private equity, smaller companies and emerging markets

You access all these cheaply through exchange traded funds like i shares or db shares

I guess I would have something like:

33% fixed interest (with a bias to short maturities, corporate issuers, inflation protection) through etfs

33% large cap global equities maybe a word index tracker wither unit trust or etf

33% high growth investments like etfs to track large cap emerging markets stocks, tech, private equity or global smaller companies

This will probably look really conservative to you but in a bad year that portfolio would go down by more than 20% in aggregate, so i actually think its pretty aggressive given your age

NickButcher

Thanks for the responses guys, don't worry about being brutal

This is all good stuff and the more advice the merrier.

NickButcher

@Linton - good call on the UK exposure (and the lack of a 'strategy')

It's only recently that I've decided to take some responsibility for this. Until the end of last year the money was languishing in a 'Managed Growth' fund that didn't appear to be either managed or growing. So I transferred it into a SIPP that I could be a bit more proactive with.

I guess the rationale for the high UK exposure is my unwillingness to stick everything into funds combined with a lack of knowledge about individual overseas shares (with the obvious exception of Apple). I figured that I'd be reasonably safe picking blue-chip stocks that have the cushion of decent dividend yields even if the share price fails to move very far. As it happens, I've been pretty lucky with some of these, +20% with the Pru for instance, with only Vodafone bombing slightly. Overall I'm up about 8% in two months, although I'm very aware that you'd need to be a complete chump to lose much at the moment.

I'm hoping to 'learn on the job' and diversify as time goes by.

Grateful for the input