Pensions: the rubbish funds

EdInvestor

Billions lost in old dog funds

Got your money in any of these?

Time to move it on...


#Zurich is running one of the largest under-performers, comprising the old high-charging Allied Dunbar funds, managing £12.8bn. Its 140,000 investors, with average holdings of £91,700, have earned only 86% of the growth in the All Share over the past decade.

#Scottish Equitable has 52,000 investors in its £5.3bn UK Equity fund, whose average £102,144 nest egg earned only 72% of the All Share.

#Canada Life has one of the worst funds which has clocked up just 33% of the All Share, not even keeping pace with inflation, with another earning 52% of the benchmark All Share.

#Phoenix, which now controls a number of 'zombie' funds including the old Royal Sun Alliance and Alba pensions, is running a number of poor performers which have scraped around 65% of the benchmark.

Several insurers, including Scottish Equitable, Royal London and Clerical Medical, while acknowledging the under-performance, stressed that new managers were now in place and the position was changing.


Don't forget to check on guarantees before moving any old With profit pensions, as they may be worth much more than you think.

dunstonh

It's exactly news though. How many years have we been saying on these forums that bank and insurance companies are poor at equities. They are good at low risk funds generally (fixed interest and property).

However, the article seems to suggest that they are not comparing like for like. First they mention UK equity then the response from bestinvest suggests they are also looking at cautious managed and balanced managed funds and you would expect them to underperform the FTSE all share over the long term as their nature is more cautious.

HL have some own brand funds in that category too and they underperform a number of the insurance companies. Strange that Tom Mcphail doesnt mention those as well... not.

EdInvestor

The full article in the paper looks at both UK equity and balanced managed funds separately. Luckily they spare us a depressing update on the zombies ( due next week maybe, as the latest Money Management endowment survey is coming up IIRC...)

dunstonh

The article is misleading though. Balanced managed funds arent using the FTSE as a benchmarket and over the long term you expect underperformance because of the nature of their investments. On a 1-10 scale they are about 2 grades lower in risk than a UK FTSE tracker and if you take the average persons attitude to risk then they are not suited to a FTSE tracker.

I'm not trying to support balanced managed funds in general as you wont find me putting any more there but the article should use the info in context and perhaps the comments from certain companies criticising others would have more weight if their own funds werent just as bad.

EdInvestor

Actually the article makes an interesting point about so called balanced funds - it quotes several which are more than 80% in equities and with no property.Hardly balanced.

dunstonh

All funds have higher and lower risk funds in their sector. Nothing new there.

I personally feel that 80% is too much though. I would have it more at 60-65%.

purch

As far as I can see all the top performing 'Balanced Managed' Pension Funds are heavily weighted towards equities, and have been so for many years.

The term Balanced Managed is itself very misleading especially to the unaware punter ( sorry investor )

EdInvestor

purch wrote: »

The term Balanced Managed is itself very misleading especially to the unaware punter ( sorry investor )

Quite agree. The "balanced" profile appears to allow up to 80% in shares and "cautious" allows up to 60%.

It's easy to see why so many low risk people were sold endowments and the like.:(