SIPP Fund Choice Sanity Check

frugaljim

Hi All, I recently opened a SIPP with BestInvest and have £40K in it as cash at the moment. I feel I have been going round in circles deciding on and then discounting which funds to invest in. I need to just bite the bullet otherwise its going to be sitting as cash forever.

So a little about me. I'm 36 so looking to grow this for 20 years. I also feel I can take a few more risks and happy with some volatility as I also have been regularly investing into ISA's for a good few years now and consider these my safer investments. Mine and the wife's ISA's are managed by a IFA at the moment but ideally as I learn more and get more confident I would like to take these on myself.

I have selected a first draft of funds for my SIPP and would greatly appreciate any feedback that anyone has. Hopefully I haven't completely missed the point. Apologies for the formatting (or lack of)

Fund, Ongoing Charge, Weight

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CF Woodford Equity Income C GBP Acc 0.75% 27.00%
Fidelity Index US P Acc Fund 0.08% 15.00%
Fidelity UK Smaller Companies A-Acc 1.71% 10.00%
First State Asia Pacific Ldrs A £ 1.55% 10.00%
Franklin UK Mid Cap W Acc 0.82% 10.00%
Marlborough Special Situations A Acc 1.54% 10.00%
Ignis European Smaller Co A EUR Acc Hdg 1.62% 5.00%
Lazard Emerging Markets Instl Acc 1.07% 5.00%
M&G Japan Smaller Companies I Acc 0.98% 5.00%
Aberdeen Latin American Equity A Acc 2.00% 3.00%


Greater Europe 59.86%
United Kingdom 49.59
Western Europe - Euro 1.92
Western Europe - Non Euro 1.92
Emerging Europe 0.76
Africa 0.49
Middle East 0.28

Americas 22.07%
United States 17.59
Canada 0.52
Central & Latin America 3.96

Greater Asia 17.77%
Japan 5.50
Australasia 1.79
Emerging 4 Tigers 5.36
Emerging Asia - Ex 4 Tigers 5.13

Not Classified 0.30

Sobryma

I use Bestinvest myself although after like yourself going around in circles I opted for their managed option - but you pay for that....

My thoughts fwiw would be to decide an asset allocation model first, you can steal either the Bestinvest ones from their website or one from a book (Tim Hale etc.) or APCIMS one. Then next allocate funds to meet the allocation BUT I would factor in your existing ISA investments - so your total allocation follows a path. I would also hold more asset classes than equities even for a long term growth plan.

There is some debate over active/passive funds, but if you go for actives go for concentrated funds or non benchmark following ones - otherwise you might as well pick a passive. One big advantage passives do have is they cut down your choice no end so make building a portfolio easier - also if your ISA's have active funds it might be worth adding passives to the SIPP.

http://www.thewma.co.uk/private-investor-indices/

http://monevator.com/9-lazy-portfolios-for-uk-passive-investors-2010/

http://www.bestinvest.co.uk/investment-research/asset-allocation

BLB53

I think its called paralysis by analysis!

Main advice would be to keep costs to a minimum - therefore I would rule out anything with charges over say 0.75% as these will eat away at the growth of your pension pot over the years.

One solution could be Vanguard LS80 or alternatively one of the multi asset funds like Legal & General.

When I was building my own sipp I used a few investment trusts - City of London, Edinburgh, Finsbury Growth % Income and Aberforth Smaller Companies - they did a good job but my sipp is now in drawdown - maybe low cost trackers would have done just as good a job but they were not available at the time.

dunstonh

have £40K

Which means you need to simplify it a lot more than you are. Wait until you at least double it before waste all that energy and time for little potential gain.

Kendall80

I've also just started up a SIPP with bestinvest. With a much more limited range of funds. For instance no bonds just yet at least 'til I build up a decent level. I have 2 funds in mind though with possible rises in inflation and interest rates to be ready for.


My fund choices are;


Woodford.
FS Asia Pacific leaders.
Vanguard dev world.


I considered the lifestrategy/multi-index approach but settled on the above. High risk but I like the coverage it provides.

frugaljim

Thanks for the replies everyone, Sobryma, I went back and compared my proposed asset allocation to the agressive growth template on BestInvest and I was pleased to see that It was quite close. I'll check out the other ones you gave me.

"paralysis by analysis" never heard this term, but hits the nail on the head. I have been looking at the Vanguard LS funds, I'll dig a little deeper.

dunstonh, You're probably right, I could get some good diversity with fewer funds and add some more when as my pot grows.

Do you tend to drip feed into your funds if you have a lump sum? also do you try to time your purchases of funds, or just buy as and when?

Thanks

suebfg

I use Bestinvest too but self select funds. I wouldn't go for Asia Pac fund you've selected as it soft closed I believe and attracts approx a 4% initial charge. Also, I don't think my husband's investment in that has done that well as the relatively high ongoing fees erode the gains. I have a different Asia Pac fund for my SIPP but can't recall the name now.

Sobryma

frugaljim wrote: »

Thanks for the replies everyone, Sobryma, I went back and compared my proposed asset allocation to the agressive growth template on BestInvest and I was pleased to see that It was quite close. I'll check out the other ones you gave me.

One thing I would also suggest is a risk analysis - maybe Finametrica or similar. That will help you set a reasonable allocation.

We all tend over rate our risk capacity or desire...... remember equities can easily lose 40%>>>> relatively out of the blue (that is not to say other assets can't do similar).

suebfg

Sorry, just re-read your post. Do you realise that once you have invested the funds, you can access a report from Bestinvest which comments on the distribution of funds, risk profile etc? Why don't you invest some small amounts in the funds selected and then read the analysis before investing the full amounts?

I've got a few trackers in my portfolio - HSBC US tracker and HSBC FTSE 100 tracker and L&G Gilt Index tracker - to offset the management fees on the Emerging Markets, Special Situations etc funds.

suebfg

I drip feed into my funds, not timed particularly but if I hear a particular stock market has declined, I might invest a bit more.

Kendall80

suebfg wrote: »

I use Bestinvest too but self select funds. I wouldn't go for Asia Pac fund you've selected as it soft closed I believe and attracts approx a 4% initial charge. Also, I don't think my husband's investment in that has done that well as the relatively high ongoing fees erode the gains. I have a different Asia Pac fund for my SIPP but can't recall the name now.

I have seen mention of this 4% up front charge on trustnet but not on CSD and I don't *think* on bestinvest. (EDIT: Its in the KIID.) Seems to be waived by bestinvest.


Also would this 4% charge apply to each monthly investment in this fund or just the first one?