Review My SIPP Pension - What would you change?

jabbahut40

Hi All,


Here is a breakdown of my current pension SIPP. What do people think? Any obvious signs of imbalance or overlap between funds? Thanks.

Fund Portfolio %
Schroder US Mid Cap Fund Inclusive - Class Z - Accumulation 15.0
First State Asia Pacific Leaders Class B - Accumulation (GBP) 13.4
MFM Slater Growth Class P - Accumulation (GBP) 11.4
Fidelity UK Smaller Companies Inclusive - Class A - Accumulation (GBP) 10.5
JPMorgan Natural Resources Inclusive - Class A - Accumulation (GBP) 9.4
Schroder European Alpha Income Inclusive - Class Z - Accumulation 9.4
Lazard Emerging Markets Class I - Accumulation (GBP) 8.7
Royal London UK Equity Income Class M - Accumulation (GBP) 8.5
Franklin UK Mid Cap Inclusive - Class A - Income (GBP) 7.5
Marlborough Multi Cap Income Class P - Accumulation (GBP) 6.1

dunstonh

Quick observations.....

1 - Very high risk (much higher than the average UK consumer)
2 - 100% equity - no fixed interest or property
3 - No Japan

Linton

It looks moderately well diversified given it's all equity though the UK allocation (44%) is rather high in my view with possible overlap in the small-ish companies funds. You could sensibly look at more US (Health or technology funds tend to have high US %), Europe, Japan (Small companies if you dont like the main index). Your EM fund invests heavily in Asia, so there is overlap with FS AP Leaders. You may want to look for EM funds that are more focused on Latin America, E Europe, Africa.

Do you have any other savings/investments? If this is more or less everything I would agree with Dunstonh's view of very high risk, but if it is balanced by for example significant cash holdings elsewhere and you have a timescale of at least 15 years I would be less concerned.

jabbahut40

Linton wrote: »

It looks moderately well diversified given it's all equity though the UK allocation (44%) is rather high in my view with possible overlap in the small-ish companies funds. You could sensibly look at more US (Health or technology funds tend to have high US %), Europe, Japan (Small companies if you dont like the main index). Your EM fund invests heavily in Asia, so there is overlap with FS AP Leaders. You may want to look for EM funds that are more focused on Latin America, E Europe, Africa.

Do you have any other savings/investments? If this is more or less everything I would agree with Dunstonh's view of very high risk, but if it is balanced by for example significant cash holdings elsewhere and you have a timescale of at least 15 years I would be less concerned.

Thanks for the feedback. I'm in my mid 40's so am expecting to hold this SIPP for another 15 years.


1. Other investments include S&S ISAs
https://forums.moneysavingexpert.com/discussion/5056222
2. Several years Cash ISAs
3. Final Salary Pension


I am thinking of going more into US and quite like Legg Mason ClearBridge US Aggressive Growth to sit alongside the Schroder Mid Cap and reduce my UK holdings. I also like your suggestion of an EM fund more focused on Latin America, E Europe, Africa. Is there any easy way to find one on the web?


Thanks

jabbahut40

dunstonh wrote: »

Quick observations.....

1 - Very high risk (much higher than the average UK consumer)
2 - 100% equity - no fixed interest or property
3 - No Japan

Thanks. I am interested in your thoughts on 1 & 2. Is it my fund selection that is high risk or the fact that its 100% equity? Appreciate that both contribute to risk however if I switched say 30% of my portfolio into a fixed interest/bond fund would you still consider it very high risk?

masonic

With the possible exception of the equity income fund, I'd say all of your funds are above average risk relative to their respective sectors. Several target growth shares, which tend to be more volatile. Other funds focus on smaller companies, which carry a higher risk. You are also overweight in emerging markets and have included a very volatile commodities sector fund in the mix.

So the comment from dunstonh that your portfolio is very high risk should come as no surprise. Of course, you might be aiming for very high risk in order to maximise returns, in which case that isn't a problem, but if you are expecting this portfolio to weather a market downturn better than say the FTSE All-World Index, then I think you will be very disappointed.

Personally, I have about the same EM and commodity exposure as you within my pension, but a lot less in smaller companies and none of the 'growth'-orientated funds. I'm also 100% in equities because I'm not planning to access the fund for 30+ years. I consider it a very high risk asset allocation, but one I'm comfortable with.

jabbahut40

masonic wrote: »

With the possible exception of the equity income fund, I'd say all of your funds are above average risk relative to their respective sectors. Several target growth shares, which tend to be more volatile. Other funds focus on smaller companies, which carry a higher risk. You are also overweight in emerging markets and have included a very volatile commodities sector fund in the mix.

So the comment from dunstonh that your portfolio is very high risk should come as no surprise. Of course, you might be aiming for very high risk in order to maximise returns, in which case that isn't a problem, but if you are expecting this portfolio to weather a market downturn better than say the FTSE All-World Index, then I think you will be very disappointed.

Personally, I have about the same EM and commodity exposure as you within my pension, but a lot less in smaller companies and none of the 'growth'-orientated funds. I'm also 100% in equities because I'm not planning to access the fund for 30+ years. I consider it a very high risk asset allocation, but one I'm comfortable with.

Great feedback! Would you be willing to share your portfolio breakdown on the forum? I would love to see it as a guide. Thanks