Rate my pension funds

simonfitba

Hello all,

I've just started a new company pension scheme through Scottish Widows. Here's the funds I've chosen (all with 0.25% AMC). Do you think it's balanced enough?

SW SSgA International Equity Index Pension Fund 36%
SW SSgA UK Equity Index Pension Fund 35%
SW SSgA North America Equity Index Pension Fund 15%
SW SSgA Europe ex UK Equity Index Pension Fund 10%
SW SSgA Japan Equity Index Pension Fund 2%
SW SSgA Asia Pacific ex Japan Equity Index 2%

I know I don't have any bonds but I'm 34 so will move into bonds after five years or so.

Any feedback would be most appreciated.

bigfreddiel

surely your international equity fund covers the areas of all your other funds so why not pile it all into your international fund

my advice is that you should combine all those funds into an all world index tracker - quite a few very low cost etfs can do this - just pick one

then i would split it into 70% in the all world index tracker and 30% gilts/bonds again in a low cost etf tracker

rebalance each year 70/30 and in six years use a 60/40 split and so on, ten years on go for a 50/50 split

simples

jdi

fj

mania112

bigfreddiel wrote: »

surely your international equity fund covers the areas of all your other funds so why not pile it all into your international fund

It's not quite as easy as that - for example, the International fund includes emerging markets.

bigfreddiel wrote: »

my advice is that you should combine all those funds into an all world index tracker - quite a few very low cost etfs can do this - just pick one

'Advice' is a powerful word here, be careful.

He has likely got a strict list of funds to chose from, being a company scheme.

SW SSgA International Equity Index Pension Fund 36%
SW SSgA UK Equity Index Pension Fund 35%
SW SSgA North America Equity Index Pension Fund 15%
SW SSgA Europe ex UK Equity Index Pension Fund 10%
SW SSgA Japan Equity Index Pension Fund 2%
SW SSgA Asia Pacific ex Japan Equity Index 2%

Geographically that's fine.

Clearly your eggs are all in one basket in terms of asset class, but they're trackers, so no harm there (in my opinion).

The performance of those funds is largely irrelevant because a) you're in index trackers (in the UK Equity Index fund for example, if the FTSE 100 performs, so will your fund. In the International Equity Index, if the FTSE World ex UK Index performs well, so will your fund... etc) b) You probably don't have alternatives to switch in to, and c) past performance is no guarantee of the future.

You have 30 years to retirement, the theory is your funds will grow well over that course of time.

Linton

simonfitba wrote: »

Hello all,

I've just started a new company pension scheme through Scottish Widows. Here's the funds I've chosen (all with 0.25% AMC). Do you think it's balanced enough?

SW SSgA International Equity Index Pension Fund 36%
SW SSgA UK Equity Index Pension Fund 35%
SW SSgA North America Equity Index Pension Fund 15%
SW SSgA Europe ex UK Equity Index Pension Fund 10%
SW SSgA Japan Equity Index Pension Fund 2%
SW SSgA Asia Pacific ex Japan Equity Index 2%

I know I don't have any bonds but I'm 34 so will move into bonds after five years or so.

Any feedback would be most appreciated.

I dont see why you are going into these smaller funds in these proportions. For some reason you dont like the % geographic allocation given by the International fund and are wanting to adjust it in some way.

From trustnet the international fund is allocated:
US 35%
Europe exc UK 29%
Pac exc Japan 14%
Emerging Markets 14%
Japan 9%.

You are then adding in 35% UK (OK snce there isnt any in the International fund) , increasing the % of US, keeping the Euopean % much the same, and reducing the overall % of Japan, EM and Asia Pac. Is this what you wanted to do? If so why?

At your age I believe you should be looking for the more volatile and potentially better performing areas. That would indicate a much higher % in Asia Pac and EM. Bearing in mind you are drip feeding into a new portfolio I would agree with your decision not to use bonds for the time being, especially as high grade bonds are at their highest ever prices.

By using these types of index funds you are making what is arguably an anti-balancing decision. For example, indexes are dominated by the largest companies. This implies a high proportion of global companies rather than those focussed on specific markets. Such companies in a global market will generally rise and fall together: a European headquartered oil company will not give you much diversification from a US headquartered one. Also large companies tend to congregate in specific sectors - banking and oil are obvious examples. In my portfolios I would like to see a good range of company sizes, area of operation etc.

I am not in a position to say more about what funds you could perhaps more profitably be invested in as I dont know what choice you have.

simonfitba

Thanks for all your comments.

Unfortunately I don't have the option of ETFs but I do have about 20 other funds under the Scottish Widows umbrella that I can pick.

IIRC the international fund is something like...
US 50%
Europe exc UK 25%
Pac exc Japan 7%
Emerging Markets 7%
Japan 7%.

I'll check and report back later. I'll also try and list some of the more jucier funds available.

I was trying to replicate a Vanguard Lifestrategy 100%-style balance but would be happy to set aside a few percent for smaller companies etc to boost growth.

simonfitba

Have added some small cap UK and emerging markets. The split now looks like this...

SW BlackRock UK Smaller Companies Pension Fund (AMC 1.12%) 5 per cent

SW JPM Emerging Markets Pension Fund Scottish Widows Global Em Markets (1.1%) 8 per cent

SW SSgA Europe ex UK Equity Index (0.25%) 12 per cent

International Equity Index (0.25%) 35 per cent

North America Equity Index (0.25%) 10 per cent

UK Equity Index Pension Fund (0.25%) 30 per cent


I've kept charges as low as possible, except the EM fund. Scottish Widows only charge 0.75% on their version but it has been outperformed by JPM for the last five years.

I know I've done away with Japan and Asia Pacific (except in the International fund) but I reckon the only way to add more to them would be to cut the UK allocation.

How does this look to everyone? I'd appreciate any comments or words of wisdom.

Linton

[QUOTE=simonfitba;63184123

SW BlackRock UK Smaller Companies Pension Fund (AMC 1.12%) 5 per cent

SW JPM Emerging Markets Pension Fund Scottish Widows Global Em Markets (1.1%) 8 per cent

SW SSgA Europe ex UK Equity Index (0.25%) 12 per cent

International Equity Index (0.25%) 35 per cent

North America Equity Index (0.25%) 10 per cent

UK Equity Index Pension Fund (0.25%) 30 per cent


[/QUOTE]


I like the bit of extra spice with Small Companies.

I dont see the point of having an International Index fund and then separate index funds for US and Europe as trustnet tells me that the 2 largest constituents of the International Fund are US at 35% and Europe at 30%, so you might as well put them all into the International Fund which would also give you a higher % of Far East.

Seeing that the International Fund is 11% EM, you could swap the JPM EM fund for EU or US Small Companies.

simonfitba

Linton wrote: »

I like the bit of extra spice with Small Companies.

I dont see the point of having an International Index fund and then separate index funds for US and Europe as trustnet tells me that the 2 largest constituents of the International Fund are US at 35% and Europe at 30%, so you might as well put them all into the International Fund which would also give you a higher % of Far East.

Seeing that the International Fund is 11% EM, you could swap the JPM EM fund for EU or US Small Companies.

Hi Linton,

Cheers for the input.

According to the Benpal factsheet for the International fund (updated yesterday apparently) USA is 58% and Europe 17% with Japan 10, Asia Pacific 7 and Emerging 6 so that's why I've tried to weight Europe a bit more.

The only small cap US fund I see available is Schroder US
Smaller Cos but strangely it is 83% UK?? and only 12% in USA.