Pension fund ideas

guitarman001

Hi all,

Under 30 and due to start having to pick funds for my pension with new advisor. There's a list below of the basic funds I'm looking at - I'd like to balance out higher-fee managed funds with low-fee trackers. Also, I'd maybe like to diversify to include some sort of gold/property etc as I don't think that's really covered in these to any great extent. Basically wants lots of diversification - not TOO much UK as think it's going down the swanny.

I've been using trustnet's fund performance charts to compare - THOUGH I don't think it takes costs into account..

Please pass on any recommendations and advice! I

-Aberdeen Emerging Markets (is this not running out of steam yet - the Asia )

-SE First State Asia Pacific Leaders (both these trounce the Vanguard ex-UK equity tracker and were recommended - Aberdeen Asian fund looks about the same as this and is 0.05% cheaper, though)

-Considered Invesco Perpetual Income but I think Vanguard trackers beat it.

-Lazard European small companies incase Europe makes a rebound?

-Kames High Yield Bond

-Newton Balanced Managed?

-Invesco Perpetual / Scottish Eq UK Corporate Bond (low growth)?

-Scottish Eq Defensive Managed 80/20 for lower risk

-Threadneedle American

No real trackers in there, actually (I'd seriously consider replacing some managed funds with trackers...)... considered Scottish Equitable global equity tracker (has to be through Scottish Equitable so no Vanguard!!).. any recommendations? I see lots of BAQ trackers but what is BAQ? Barclays!?

Also been reading this (I thought trackers always won out?):

http://www.thisismoney.co.uk/money/investing/article-2176572/How-pick-best-cheap-tracker-fund--HSBC-F-C-Santander.html#axzz2L0itV05A

BLB53

The biggest drag on pension returns is likely to be costs and fund charges. Therefore, whatever fund you choose should ideally be 0.5% or less which is why trackers have the edge over the longer period.

Do you know what the charges are on the funds you list?

Fabius

Under 30 and due to start having to pick funds for my pension with new advisor.

You don't pick funds with a new advisor. S/He gets paid to do a proper analysis of your risk profile and term to retirement, as well as affordability.

You don't say if this is an employer's scheme. If it isn't then have you got one available? Could that be a better proposition (employer contributions, subsidised charges etc)?

All of the funds that you list are flavour funds (that is to say that the press likes them because the numbers are good). Behind that a few are actually very good, but this can vary depending on how you access them as performance (and charges) differ between different insurance company mirror versions.

Charges will drag down performance but the performance of a couple of those funds have hugely outweighed the disadvantage of the high charges compared to their index tracking counterparts.

I have no idea what scheme you have here, so no idea of the range of funds, charges, whether they are direct or mirror. However, I work to this mantra: good asset allocation according to risk profile and term (I am 85% equities and 15% property at age 33) and use trackers in big markets and active fund management in small ones,

Also, I am about 40% UK equities (don't knock them, profits are generated globally).

The theory goes that in a big market the markets are more efficient and therefore there is less scope for an active manager to outperform. Tracking error is the key differentiator in tracker funds.

However, in smaller markets an active manager can add value because there is generally less information freely floating about and research on the ground can be beneficial. Try to avoid huge funds. A great differentiator for active funds in a sector is to divide the 3-year sharpe ratio by the TER, the higher the number the better.

I'll finish where I started, you don't pick funds with an advisor, his/her job is to pick them for you, as part of a total portfolio. If you want advice from a professional then don't come here to pick it apart because posters here have no liability to you. If you don't want advice from a professional then tell the advisor that you'll go it alone (check out Monevator).

Your advisor doesn't want to here about what you were told about this fund or that fund on this forum, they have their own approved research methods and they are taking a long term view over the entire span of the relationship that they hope to have with you.

guitarman001

Only got time for a quick message:

Work scheme, yes - so employer contributes a whack. Spoke to advisor and because I'm relatively young he suggested emerging markets etc, but suggested I look into fund choices myself, also - not a good approach? Perhaps I should e-mail to get further ideas of what to invest in.

EDIT - any recommendation for small managed funds you mention? Just to take a look..!

Fabius

If you are reasonably intelligent and, more importantly, interested, then you can easily manage this yourself. You have a long time to learn from early mistakes. Check out Monevator. He'll help you avoid the common pitfalls.

Fabius

guitarman001 wrote: »

EDIT - any recommendation for small managed funds you mention? Just to take a look..!

Pointless without knowing the range available to you. Anyway, I'd encourage you to do your own research.

jem16

guitarman001 wrote: »

Only got time for a quick message:

Work scheme, yes - so employer contributes a whack. Spoke to advisor and because I'm relatively young he suggested emerging markets etc, but suggested I look into fund choices myself, also - not a good approach? Perhaps I should e-mail to get further ideas of what to invest in.

So is the advisor that you're talking to the scheme advisor or one you are paying to provide you with advice?

Alan53

My work pension scheme is with scottish equitable too. The fund descriptions that appear on annual statements actually refer to the fund as say 'blackrock gold 1.00%'. All the funds that i have state 1.00% and this is in spite of the fundfact sheets referring to higher costs. You really need your advisor to be informing you of the costs as they can vary from one employer scheme to another.

I have 30 years until i retire. My current fund split is as follows:

Newton balanced managed 23%
Invesco perpetual income 42%
Blackrock gold 11%
First state global resources 12%
Jupiter china 4%
Aberdeen emerging markets 4%
First state pacific leaders 4%

The above is a defensive position and is not as diversified as it should be for the long term. Longer term i would plan on having 20% exposure to emerging markets and less in the uk. I also plan on investing into blackrock euro dynamics.

Scot eq have an excellent range of funds from which to choose. If you were to look at the hargreaves lansdown website, it shows model asset allocation splits. If you then crossrefer their wealth 150 selection to the scot eq range you won't go far wrong.