Index linked fund/ should i change?

MOUNTY

I hold an Index linked fund within my Friends Life pension. Approx £14k.
Should i now take more risk in another fund over the next 8 years bearing in mined i also have:
Balanced Managed fund
Cautious Index fund
Blackrock UK equity fund
Is it now a good time for a Europe fund or Asia?
I am paying in £150 pm at 25% x 4 funds.:idea::idea::idea::idea:

kidmugsy

When you say "index linked" do you mean it's linked to inflation?

mania112

No, it's linked to an index....

mania112

and to answer your question, it's quite difficult for anyone here to answer that question - Do YOU want/need to take more risk?

That's really all it can come down to (for us here, not knowing you and your circumstances).

Besides, you can have index linked funds in Euro/Asia, so it's difficult to assess what you have, and what you want to go in to.

kidmugsy

mania112 wrote: »

No, it's linked to an index....

Inflation is measured by an index: RPI. Maybe you've heard of it?

dunstonh

index linked would typically indicate index linked gilts. Linked being the key word. An index tracker wouldnt use the word linked.

MOUNTY

kidmugsy wrote: »

When you say "index linked" do you mean it's linked to inflation?

It is linked to an index.
Invested in index linked bonds.

MOUNTY

kidmugsy wrote: »

Inflation is measured by an index: RPI. Maybe you've heard of it?

RPI is low for me. £14k to build up in a better fund i hope, admit taking a risk for better returns.

jamesd

MOUNTY wrote: »

I hold an Index linked fund within my Friends Life pension. Approx £14k. Should i now take more risk in another fund over the next 8 years

You should reduce your risk by switching some money out of the index linked fund.

The reason the switch out reduces risk is that I'm assuming it's mostly in gilts and that means that it's in a bubble of capital value that can be expected to pop once economic recovery is well in progress. Even if not in gilts, index linkers will be expected to drop in capital value as interest rates rise.

Normally these are some of the lowest volatility (often called risk) investments around but now is an unusual time where there's substantial risk that you'll lose 40% or so of the capital value over the next few years. Most of what has been gained in recent years.

You might consider a commercial property fund that holds real property as one of the alternatives. Those are currently out of favour but should do reasonably well as the economy improves.