SHP Pension Fund Allocation Help

xemeter

Hello,

I have recently joind an SHP through the company I work for via Winterthur. The available funds are quite poor performing and many seem to be almost duplicates of each other. I've picked out what seem to be the best of the availble funds and my allocations are as follows:


Aberdeen Global Gth Pn 25%
Aberdeen Mgd Dist Pn 30%
Aberdeen MultiAsset Pn 27.5%
Aquilla HP Over 5Y IL Gilt Pn 7.5%
Tneedle Eurpn Eq Pn 5%
Tneedle Nth Am Eq Pn 5%

However I do feel that the allocations are not quite right, would anyone care to make any suggestions regarding the allocations / percentages etc?

I can post the list of other availble funds if anyone would also care to look at those, although I does seem that these are the bestt of a bad bunch.

Any help would be much appreciated.




Here is the full list of funds:

Aberdeen Global Growth Pn 3
Aberdeen Managed Distribution Pn
Aberdeen MultiAsset Pn 2
Aquila HP Consensus Managed Pn 2
Aquila HP European Equity Index Pn 3
Aquila HP Global Equity 60/40 Pn 3
Aquila HP Global Equity 70/30 Pn 0.30%
Aquila HP Over 5 Years Index Linked Gilt Pn 3
Aquila HP Over 15 Years Index Linked Gilt Pn 3
Aquila HP UK Equity Index Pn 3
Winterthur Fixed interest
Baillie Gifford Managed Pn 2
Elite Balanced Managed Pn
Elite Cautious Managed Pn
Elite Stockmarket Managed Pn
International Pn Ord
Newton Income Pn
Newton International Growth Pn 2
OM Select Managed Pn
Schroder Equity Pn 2
Schroder Managed Pn 2
Threadneedle European Equity Pn 3
Tneedle North America Equity Pn 3
Tneedle Pensions Properites pn

dunstonh

SHP is the abbreviation used for Stakeholder pension. So, I am going to assume that is the pension type in question.

Why have you picked those funds?
What investment strategy are you using?
how often are you going to review and rebalance?

xemeter

Hello,

it is a Stake Holder Pension.

I picked the aberdeen funds as they appear to be the best performing funds out of those available. I compared the alpha, beta, info ratio, sharpe etc and they seemed resonably ok.

I looked at the performance of each fund over several time periods, in particular the 5 year performance (as this approximatley coincides with the 2008 crash) to see which funds offered the best performance during that period and are therefore the most resiliant to big down turns.

Thats why I allocated the largestest % to Aberdeen Mgd Dist Pn to form a core with addition of the Aquilla Gilts (bringing overall fixed intrest to approx 25% of the holding). However, this is weighted entirley towards the UK, so I added the Aberdeen Global Gth Pn and Aberdeen MultiAsset Pn to diversify the portfolio and finally added the US and EU funds to raise the overall allocation in those areas, although I do feel that it is underweight in US equities and the EU looks to heading south so I'm quite wary of that area at the moment. Additionall there is limited availability within the fund range to add exposure to Em and Asia Pac, perhaps Baillie Gifford Managed Pn and OM Select Managed Pn.

Dare I say I'm entirily not sure what my overall strategy is yet.

I'll review the prortfolio regularly (I have to say that since starting the pension my intrest the markets and funds etc as really piqued) as for rebalancing, perhaps 6 monthly / yearly although I think I need to define a strategy first.

gadgetmind

How far off retirement are you (or would you like to be!) ?

If the value of your pot (or any part of it) fell drastically would you keep investing and rebalancing or panic and sell?

Linton

You are right - you do need a strategy first.

Gadgetmind has provided some key questions.

If you were 1 year off retirement and buying an annuity then your allocation is very risky, if it's 30 years away the allocation is rather unambitious.

In the latter case, given that your available choice is very constrained, I would suggest a much higher % of growth funds with exposure to EM and Asia-Pac. If your timescale is 30 years dont be too concerned about current events - by the time you want your pension something would have been sorted out on these and there will a fresh lot of burning issues you cant begin to predict.

xemeter

Not long enough really, due to a massive change in personal circumstances I've started this pension very late, I'm 36!.

I suppose that depends on how drastic the fall was.

xemeter

Yes I agree it is unambitious but the quality of the other funds are pretty poor and hardly offer any exposure to EM / Asia Pac. And when you consider the 5 / 10 / since launch and anualised performance the 3 main funds that I have chosen are probably the best performing.

Linton

xemeter wrote: »

Not long enough really, due to a massive change in personal circumstances I've started this pension very late, I'm 36!.

I suppose that depends on how drastic the fall was.

So, unless you plan to take early retirement, which unfortunately seems unlikely,my suggestion would be to focus on the growth funds particularly those that appear to be biased towards the geographies you feel will provide the best long term return. You dont IMHO need to be heavily into bonds.

I also suggest that whenever prices drop you celebrate as it means that you are getting more pension units for your payments. Remember you are in it for the long term.

xemeter

I have been thinking of dropping the gilts anyway as I'm sure they're overpriced or heading that way and reducing the allocation to the managed Distribution. I've also spoke to the company secretary regarding a review of the funds and the requirement for a more diverse set of funds, especially EM and Asia/Pac- the scheme is under review at the moment due to the forthcoming pension auto-enrollment - although, saying that I don't expect anything to change!

I'm also considering starting another pension; a SIPP to gain access to alternate funds, though this does seem an expensive option with the cost of the ongoing initial charges.

gadgetmind

xemeter wrote: »

I'm also considering starting another pension; a SIPP to gain access to alternate funds, though this does seem an expensive option with the cost of the ongoing initial charges.

There are SIPPs and there are SIPPs. If you need a SIPP that will let you directly hold commercial property and a vast array of other exotica, then startup costs can be high. If you want a SIPP to just hold funds, ITs and equities, bonds and gilts, then it's MUCH cheaper.

Depending on exactly what you want to hold, and how much, different platforms are better.

xemeter

I've had a look around at several platforms and SIPPDEAL is free provided you choose funds on their list otherwise there's a custody charge which is approx equivalent to holding a SIPP with iii. It's the initial charges that are off-putting if I'm going to drip feeding into funds through a SIPP. And I'd have to put in £6K a year to get the custody charges down to 1% with iii and with SIPPDEAL if I chose something not on their list.

I'M considering building the funds up with Asia/Pac and EM trackers (though there is a dearth of EM trackers available) and then maybe switching to some managed funds.

I also have some share options maturing in about 3 years that I may throw into the mix if they work out ok.