pension profile

tomr89

Ive recently been auto enrolled through work and was having look at my pension providers website. This is my first pension, I'm 25 years old and plan on upping my contributions shortly.

My investment profile is currently set as "Balanced"
B&CE Global Investments (up to 85% shares) Fund-
80% UK and overseas equities
20% bonds and cash

But also gives me the option to switch to "Adventurous"-
B&CE Global Investments (up to 100% shares) Fund-
50% UK equities
50% overseas equities


I also have the option to tailor my own profile choosing a % from each of the following-

B&CE GI (up to 100% shares)

B&CE GI (up to 85% shares)

B&CE GI (up to 60% shares)

B&CE Pre Retirement

B&CE Cash

B&CE Ethical

B&CE Shariah


My question is with me being quite young and my current pension pot quite small I was considering opting for a riskier strategy. Would anyone be kind enough to offer any information/opinions on this. I'm quite new to investment/pensions so please excuse my naivety!

PeacefulWaters

If I was 30+ years from retirement I would certainly be ditching bonds and cash.

I'd also want to have a greater percentage of the fund in global rather than UK.

There's no right and wrong answer though. But it's great that you're taking an active interest.

Is there any sort of property option?

tomr89

Thanks for the advice!

Taking bonds and cash out of the equation the two funds I have access to are listed below. I can choose to invest a % in each.

B&CE GI (up to 100% shares)
Asset Allocation- (%)
49.7 UK Equity Index Fund
17.5 North America Equity Index Fund
17.6 Europe (ex UK) Equity Index Fund
8.9 Japan Equity Index Fund
6.3 Asia Pacific (ex Japan) Equity Index Fund

Sector Breakdown (%)
Financials 23.6
Health Care 8.8
Consumer Goods 14.5
Basic Materials 7.3
Industrials 12.6
Technology 5.0
Oil & Gas 10.4
Telecommunications 4.2
Consumer Services 10.0
Utilities 3.6

B&CE Ethical Fund
Asset Allocation (%)
44.2 North America
27.5 Europe (ex UK)
13.8 UK
8.5 Japan
5.9 Asia Pacic (ex Japan)
0.1 Middle East & Africa

Sector Breakdown (%)
Financials 28.94
Telecommunications 5.66
Technology 13.8
Basic Materials 5.34
Consumer Goods 12.26
Oil & Gas 3.88
Health Care 12.24
Utilities 2.1
Consumer Services 8.2
Unclassified 0.01
Industrials 7.5

Fund Aim/Objective
The B&CE Ethical Fund aims to track the performance of the
FTSE4Good Global Equity Index to within +/-0.5% per year for two
years out of three. This is a higher risk fund aimed at maximising
growth over the long term.

Theres also-
B&CE Shariah Fund
Asset allocation-
66.03 North America
17.90 Europe ex UK
5.60 UK
4.15 Asia (ex Japan)
3.82 Japan
2.30 Australia
0.20 Cash

No sector break down.

Fund Aim/Objective
This Fund aims to offer investors the opportunity to grow their
money in line with the performance of the Dow Jones Islamic
Titans Index.


No property as far as I can tell!

PeacefulWaters

Yup. You've paid it far more attention than I have!

Thanks for the advice!

Not advice.

Information. Opinion. But not advice.

tomr89

PeacefulWaters wrote: »

Yup. You've paid it far more attention than I have!

Not advice.

Information. Opinion. But not advice.

I know the drill

Do you mind my asking of why you would go for a greater percentage of the fund in global rather than UK?

PeacefulWaters

tomr89 wrote: »

I know the drill

Do you mind my asking of why you would go for a greater percentage of the fund in global rather than UK?

Why risk your pension in one economy?

Diversify the risk.

UK stock market performance hasn't been impressive when compared to others over the long term.

Equally, ask yourself the question around the size of the North American exposure in some of the alternatives and seek a balance that you're comfortable with.

kidmugsy

PeacefulWaters wrote: »

UK stock market performance hasn't been impressive when compared to others over the long term.

Over a long enough term it's done better than almost all others, the US being an exception.

The future, though, is another country.

jamesd

Given your age the 100% shares option looks best. The Sharia one has substantially more in the US and since US markets are currently at high levels that makes it a less good time to be buying there. That'll change sometime and when it does that fund will become a better choice than the 100% equity one that has a too high UK weighting.

None of the investment choices is great and unless you are in a salary sacrifice work scheme I suggest that you use the work scheme for no more than it takes to get employer matching and use a personal pension for the rest.

The reason high equity levels are appropriate is that that is what is likely to produce the best growth. The catch is that it does it with deeper drops and young people often can't stomach those so even though they have decades for recovery they can become scared and stop investing. A typical pure equity drop level would be around 20-25% a few times every ten years and 40-50% once or twice every ten years. If those happen in the early years there won't have been enough growth to prevent the value falling below the amount paid in, though that does change over time.

The cash fund could be useful for times when you have a very high confidence that there will be major market drops. The major catch here is that people tend to get this wrong and spend lots of time in cash when they should be invested in equities, losing them more than they save.