Opinion on these Funds please.

riccaricca

Hi All,

I'm in the process of looking to change funds in my Personal Pension as I don't think it's done very well.
I started the pension in 1999 and up to 2013 (I haven't got this year's figures yet) I had paid in approx £23000 and the value was £28000. Around £5000 growth in 14 years.
I'm self employed and pay into PP £200 per month in total. That includes the tax refund.
I'm not knowledgeable, confident enough or have the time to pick my own funds or manage them so I have to use a IFA.
Anyway I have about £31000 to change funds.

I'm with Friends Provident at the moment but the IFA has recommended AXA wealth Limited and these funds.

20% into Henderson European Selected Opportunities
20% into First State Asia Pacific Leaders
20% Jupiter Japan Income
20% JPM Emerging Markets
10% Newton Asian Income
5% Artemis UK Special Situations
5% Psigma Income

When I asked why put so much in Asia and Japan he said that because I had told him "I was quite happy with a medium to high risk outlook, as long as I got a good return" these were good funds.
I'm 36 so have a long way to go until I get my pension. I was hoping it would be when I got to 60, but at this rate I will never be able to retire!!!
Also the charges seem high.
I haven't decided on anything yet as I'm still wading through the paperwork at the moment trying to make sense of it all.
Any pitfalls to look for?

Any opinion would be gratefully received.

Triumph13

You may get more responses to this if you ask on the savings and investments board.

The only response I would make to the suggested fund spread is 'Yikes!'

dunstonh

Around £5000 growth in 14 years.

Although do consider that you have pretty much had a disaster 14 years. Two market crashes of a scale that you would normally only see once in a generation. (dot.com and events that followed then the credit crunch etc)

When I asked why put so much in Asia and Japan he said that because I had told him "I was quite happy with a medium to high risk outlook, as long as I got a good return" these were good funds.

Different firms look at risk in different ways. That spread would come out at risk 10 out of 10 on our scale (when measuring mainstream investors). That said, age 36 with another 30 or so years to go, that is not necessarily a bad thing.

I was hoping it would be when I got to 60, but at this rate I will never be able to retire!!!

That is not realistic on the size of your fund or the size of your contribution.

Also the charges seem high.

They will be higher as you are using externally managed investment funds. The funds themselves are fine but you do pay a premium for those type of investments.

Personally, give your small regular contribution and the small fund that exists, I would have stuck you in the cheapest multi-asset fund appropriate for your risk profile, prepare you for bad news on the age 60 objective and tell you what you need to pay instead and say that you only need to review it every 2-3 years after that until the fund gets to a more sensible size where the use of investments like that is more cost effective. However, investing is about opinion. There is no right or best way. Many wrong ways but it all opinion.

xylophone

20% into Henderson European Selected Opportunities
20% into First State Asia Pacific Leaders
20% Jupiter Japan Income
20% JPM Emerging Markets
10% Newton Asian Income
5% Artemis UK Special Situations
5% Psigma Income

This does not seem to me ( no expert though!) a balanced portfolio.

£200 per month into your pension seems a small amount - http://www.moneysavingexpert.com/savings/discount-pensions
might be worth a browse.

Re State pension https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

http://www.theactuary.com/news/2014/05/single-tier-state-pension-passed-into-law/

sorcerer

I think an important question to ask is, how old are you, since that seems a high risk portfolio, do you have time to recover if the markets go against you?

mgdavid

sorcerer wrote: »

I think an important question to ask is, how old are you, since that seems a high risk portfolio, do you have time to recover if the markets go against you?

I appreciate it's 7 lines from the end so one would need to read through the whole post but it is in post #1.

Linton

I agree with Xylophone that your portfolio looks very unbalanced. If you want to invest in risky areas you need to cover a reasonable number of them. In your case you are heavily weighted to SE Asia. You have the First State fund, Newton Asian Income seems to be 70% SE Asia, and something like 50% of the JPM EM fund is invested in SE Asia. Unfortunately SE Asia has performed unusually poorly in the past year, so I fear you may be disappointed when the latest figures come in.

Other higher risk areas to consider, if that's what you want, could be Smaller Companies in UK,US,Japan etc and Technology.

I think your contribution is too small to make the use of an IFA worthwhile which could well account for some of the under performance. Suggest dispensing with him and look at a single fund that invests in a wide range of sectors. However even then, you are not going to be able to retire with a large pension at 60. Have a look at the H-L pension calculator.

kidmugsy

In your shoes I would -

Sack the IFA and transfer the lot to a SIPP at (for example) HL. Put 50% into a globally diversified cheap equity fund or ETF (Vanguard?), 20% into inflation protection e.g. an ETF of TIPS (the US equivalent of index-linked gilts), 20% into something cash-like (perhaps a fixed interest gilt with a shortish maturity e.g. four or five years), and 10% into Gold Bullion Securities. I'd rebalance once per year.

If that looks too stodgy for you, put the equity up to 60% and reduce the next two to 15% each.

Then be patient: check how it's doing only once per year and hang on through the bad times.

Of course, I'm not in your shoes.

Sobryma

kidmugsy wrote: »

In your shoes I would -

Sack the IFA and transfer the lot to a SIPP at (for example) HL. Put 50% into a globally diversified cheap equity fund or ETF (Vanguard?), 20% into inflation protection e.g. an ETF of TIPS (the US equivalent of index-linked gilts), 20% into something cash-like (perhaps a fixed interest gilt with a shortish maturity e.g. four or five years), and 10% into Gold Bullion Securities. I'd rebalance once per year.

If that looks too stodgy for you, put the equity up to 60% and reduce the next two to 15% each.

Then be patient: check how it's doing only once per year and hang on through the bad times.

Of course, I'm not in your shoes.

Sounds remarkably sensible - maybe flex Gold a bit lower and go for physical gold ETF, option to go Global for bonds side as well.

riccaricca

Thanks for all your replies.

Triumph13, "Yikes and other words" is what I said about suggested fund spread.

dunstonh, I understand what your say about the crashes etc. that have happened over the last 14 years, so perhaps I was expecting too much.

I would like to save more but at the moment this is the most I can save.

I've been wading my way through the paperwork and it seems I will have to pay £750 for them providing advice. An ongoing fee of 0.5% p?a. of £900 for the first year, which will deducted from the pension. Overall the (R.I.Y) is 2.2% p.a. So a total of £1650.

At the moment my funds are "Friends Life with Profits", Allocation 18.00% and "Friends Life Managed Fund", Allocation 82.00%.

Perhaps I should just keep these funds and don't bother changing, as it would take a long time to recuperate all these costs.

Any thoughts?

alexanderalexander

kidmugsy wrote: »

In your shoes I would -

Sack the IFA and transfer the lot to a SIPP at (for example) HL. Put 50% into a globally diversified cheap equity fund or ETF (Vanguard?), 20% into inflation protection e.g. an ETF of TIPS (the US equivalent of index-linked gilts), 20% into something cash-like (perhaps a fixed interest gilt with a shortish maturity e.g. four or five years), and 10% into Gold Bullion Securities. I'd rebalance once per year.

If that looks too stodgy for you, put the equity up to 60% and reduce the next two to 15% each.

Then be patient: check how it's doing only once per year and hang on through the bad times.

Of course, I'm not in your shoes.

Really? The OP is only 36 so has at least 22 years to go before he could legally access this money, and more like 30-odd years until he is likely to do so. With a 20+ year time horizon, I don't see why it shouldn't be 100% equities (although I agree he should go more diversified than the current spread). Certainly having 50% in top grade sovereign debt and gold seems crazily risk-averse for such a long investment horizon.

I do entirely agree with sacking the IFA and self-managing via a SIPP though.