Is my pension doing OK

horlicksjan

I checked my pension. In 2005 I invested £100,000. The fund value is now £145,000. So it has gone up 45% in 12 years. Starting with £100,000 and compounding the growth for 12 years to get to £145,000 is 3.2% per annum.

Is it OK or should I change?

The allocation is like this:

Aberdeen Eur FrontierA 7%
Artemis European Growth 7%
Henderson Asia Pac Cap Gwth 10%
Henderson Emerging Mkt Opps 9%
INVESCO Perp Global Sm Cos 14%
INVESCO Perp High Income 12%
INVESCO Perp Latin American 12%
OM Artemis UK Special Sits 11%
OM JPM Natural Resources 6%
Schroder UK Mid 250 11%

As a comparison I have a UK Index Tracker which I started 3 years ago and have put money in once a year. That has gone up 28% over 3 years, and is closer to 10% a year.

I know the Pension period includes the stock market crash a few years back but overall should I be satisfied with the way the pension is performing, or should I make some changes?

redbuzzard

Did you start in 2005, or 12 years ago?

There's a fairly heavy weighting on non-UK, and emerging/developing markets there and little US. Has that always been so? Are these the current weightings?

JoeCrystal

You have to take inflation into account. Will use two different dates (2001 or 2005) The value of £100,000 in 2001 requires the equivalent of just under £142,000 in today's money. The value of £100,000 in 2005 requires the equivalent of just under £128,000 in today's money according to the Inflation calculator at HL.

Basically you either just manage to maintain the real value of your pension or higher than inflation.

Cheers,
Joe

Linton

We need the answer to 2005/2000 start. Also your list of funds cant be right as Aberdeen Euro frontier only started in 2009 according to Trustnet.

I have entered the data for all your funds in the right proportion (except for the Aberdeen fund and Artemis Special Situations for which there does not seem to be a price for 2005) into the Trustnet portfolio tool and I get a total valuation now of £190K or so. The Trustnet prices for 2005 match my data in the few cases where I hold the same funds.

So can you confirm that your data is in fact correct? Could you have drip feeded your investment rather than actually spent £100K in 2005?

horlicksjan

It was 2005, not 12 years ago, 8 years ago which is 5.5% with compound interest. A bit better, but should I settle for this?

The fund gets switched regularly by the firm that set it up, so this is the current allocation.

dunstonh

The fund gets switched regularly by the firm that set it up, so this is the current allocation.

That is probably why it has done well. Rebalancing helps in periods of volatility. It also explains the fund spread.

Linton

dunstonh wrote: »

That is probably why it has done well. Rebalancing helps in periods of volatility. It also explains the fund spread.

I am not so sure it has done so well, or at least as well as it should have bearing in mind the relatively high risk of many of the current investments. If the OP had invested in a FTSE100 tracker in 2005 he would have been better off (depending to some extent on when in 2005 he started). However if he had invested in a portfolio similar to his current one and didnt change it he would have done even better.

Perhaps the management firm is over-tweaking, assuming they are responsible for the allocation.

horlicksjan

If the firm are actively managing it, and charging, I would want to get better return than a FTSE tracker. But I'm not sure how to change it. I have aFTSE tracker, which seems to have done better, but I don't think I should have have everything in FTSE tracker.

I will review my FTSE tracker provider too, they charge 1%, there are probably ways to have a FTSE tracker for less. Also there is no way to have a stop loss on the tracker, all you can do is phone up and ask for money to be withdrawn by bank transfer at the days closing price. Are there any low cost trackers that allow you to buy or sell units during market trading, and set stop losses?

atush

Sounds to me they are over tweaking, and perhaps overcharging? Check.

5.5% isn't awful, but if your highly paid managers can't beat the Ftse 100 with all their talents, then a diversified group of well allocated trackers (ie not all UK), income investment trusts, lifestyle funds and some bonds you might be able to DIY cheaper?

Linton

horlicksjan wrote: »

If the firm are actively managing it, and charging, I would want to get better return than a FTSE tracker. But I'm not sure how to change it. I have aFTSE tracker, which seems to have done better, but I don't think I should have have everything in FTSE tracker.

I will review my FTSE tracker provider too, they charge 1%, there are probably ways to have a FTSE tracker for less. Also there is no way to have a stop loss on the tracker, all you can do is phone up and ask for money to be withdrawn by bank transfer at the days closing price. Are there any low cost trackers that allow you to buy or sell units during market trading, and set stop losses?

I dont think you do much good trading index funds in a pension. Pensions are for the long term. Buy funds that invest in things you believe have a long term future and ignore the daily, weekly, or even yearly variability. That's my philosophy anyway.

I agree that you shouldnt put everything in a FTSE100 tracker. To be quite honest, I dont think one should put anything in a FTSE100 tracker, but it forms a useful benchmark to assess other options.

In general funds dont change price dynamically during market trading. The price is fixed once a day and that's it. Anything you buy and sell is at tomorrow's price.

redbuzzard

The chances of a managed UK equity fund beating the FTSE on a total return basis, long term, or even short-medium term measured when the FTSE is at or near a high, are well less than half.

Looking at the funds held now makes me wonder if the manager has been chasing returns by buying historically strong performers. Just a feeling. Are you rebated all the commission when funds are switched?

If you want a tracker that you can know the price of when you buy or sell it, use an ETF.