Pension Fund selection

srcandas

Sarah expect you've noticed but just to say keep an eye on funds with a buy/sell spread as well as running costs. In my pension fund a change of fund could cost 7%. Wouldn't want to be doing that too often

The IFA will cost money as well as being difficult to find and you seem to be almost there.

I'd say your split across types and territories is medium risk. Personally at 35 I'd go for more emerging markets but use funds which spread across several territories and invest in big organisations. But that's just me.

Good luck :beer:

gadgetmind

Saving_Sarah wrote: »

Some funds are externally managed and have an additional fee - similar 'balanced' funds look to be available through the in-house managed funds from L&G. I'm guessing one might select an external fund over the "in house" fund because of its performance?

I would only ever use an external fund if it did something different to the available internal ones, or if the internals ones were consistently bad. My group pension is with Friends Life, and they have some very good internal funds, so I tend to stick with these. I do, however, use an external fund to boost my emerging markets exposure.

How often do you review your fund allocations?

Personally, I try and do this at most once per year, but have been known to tinker between times. I also leave alone unless something has got to +/- 10% of my intended allocation, but some people go as high as 20%, or even have different upper/lower bounds.

I've looked at some free asset allocation models and I'd like to go for moderate to high risk funds. I'm considering keeping 70% in equity and 30% in property, bonds, gilts etc. 50% in the UK, 20% dev. europe, 15 % n america, 10% asia and emerging markets and I'm trying to choose the funds to match this criteria.

There is no such thing as the perfect portfolio, and people could argue about UK versus US until the cows come home, but that allocation looks sane to me.

Saving_Sarah

A belated thanks for your help with this. I let my mind settle for a while, did some reading before coming back to this and making a decision about which funds to go for. Thanks for the advice, I've learnt a lot and I hope you still think my choices look sane.

I've decided to stick with internal funds as there are no additional management fees. Unfortunately from the available funds there were no real options for significant emerging market investment, apart from some asia emerging market exposure.

I've also discovered that its difficult to analyse the asset allocation of a portfolio using Trustnet due to the lack of info in the fund factsheets: when i looked at the asset allocation spread of my basket, approx 50% is "unknown".

In an attempt to spread the allocation, I've decided on the following. All but property are high risk funds - I'm 35 with a good while to retirement.

L&G International Pn G17 SH 20%
L&G Property Pn G17 SH 5%
L&G Far East Pn SH 15%
L&G Global Equity Index Fixed Weights 50:50 Pn G17SH - 45%
L&G UK Smaller Companies Pn SH 15%

I know that I have a lot more to learn, but I hope this is a decent starting point.

bigadaj

I'm nota sure so sure that property isn't the high risk area, many might consider it more so than emerging markets currently.

I see what you mean on the asset allocation on trust net, I think this may be a problem with the fact that they are in house, I've checked some externally managed funds in my pension before and there is a detailed breakdown probably because they simply correspond to the appropriate unit trust/ oeic.

I tend to review my funds every couple of months, well review is a bit of an exaggeration, just a brief look really. Then tend to consider any changes every six months to a year, Which is normally just tweaking a small percentage, though frequently nothing.

Limiting charges is very important, but you also need to review fund performance, most people consider trackers to be fine for uk and us but many think ti is worthwhile to pay more for emerging markets etc

Good luck with it all, it is invaluable to pick up the basics of investing and have control, but you have to take it on the chin when inevitable drops occur and remember that Whilst it's always good to hear other opinions and be critical of your viewpoint you are the only person who can know what is right for you.