Are my fund selections sensible?

Temrael

Hi there,

I'm just reviewing the fund selections in my pension and whilst they look to my untrained eye to be performing ok (the graph seems to point up on the right hand side! ) , I'd love a steer from you guys as to whether they still look sensible.

The pension is an Aviva provided, salary sacrifice company pension and holds about £57k currently. (This isn't my only pension, I have some final salary provisions from previous jobs but they are managed for me. My wife also has a much smaller stakeholder pension that is currently invested similarly to this.)

The funds in this Aviva pension were selected about 5 years ago in conjunction with an independent pensions advisor who assessed my attitude to risk as medium to high.

The current fund selections are...

90% in Aviva Pensions BlackRock Aquila 50:50 Global Equity Index Tracker S6

10% in Aviva Pensions Corporate Bond S6

I guess my questions are...

a) I'm nearly 41, do you think it's time to begin the process of dialling back any of the risk? I believe the BlackRock Global Equity fund is a little more speculative?

b) Should I look at a bit more diversification? Smaller pots, additional funds? What sort of funds ought I to look at and what sort of balance?

c) How should the fund selections that I end up with in this, our biggest pension, affect our fund selections elsewhere. For example, we're looking at starting in Stocks and Shares ISAs? Would you look for totally different fund selections there or take the view that once this Aviva pot is diversified and sensible, then it is ok to replicate that elsewhere in our portfolio?

Thanks in advance for any thoughts.

Temrael

Oh just came across this useful summary of my current selections vs. what I could do, tucked away on Aviva's website.





This is my current portfolio vs. an example "balanced" portfolio, their example "adventurous" is very similar but just with less in UK Equities and more in Global Equities.

I note both have Property at about 15%, is that what I'm lacking currently?

Should I dial back the Global Equities a little to move into Property, or given that I'm still at least 15 years out from retirement is that overly cautious?

dunroving

Temrael wrote: »

Hi there,

I'm just reviewing the fund selections in my pension and whilst they look to my untrained eye to be performing ok (the graph seems to point up on the right hand side! ) , I'd love a steer from you guys as to whether they still look sensible.

The pension is an Aviva provided, salary sacrifice company pension and holds about £57k currently. (This isn't my only pension, I have some final salary provisions from previous jobs but they are managed for me. My wife also has a much smaller stakeholder pension that is currently invested similarly to this.)

The funds in this Aviva pension were selected about 5 years ago in conjunction with an independent pensions advisor who assessed my attitude to risk as medium to high.

The current fund selections are...

90% in Aviva Pensions BlackRock Aquila 50:50 Global Equity Index Tracker S6

10% in Aviva Pensions Corporate Bond S6

I guess my questions are...

a) I'm nearly 41, do you think it's time to begin the process of dialling back any of the risk? I believe the BlackRock Global Equity fund is a little more speculative?

b) Should I look at a bit more diversification? Smaller pots, additional funds? What sort of funds ought I to look at and what sort of balance?

c) How should the fund selections that I end up with in this, our biggest pension, affect our fund selections elsewhere. For example, we're looking at starting in Stocks and Shares ISAs? Would you look for totally different fund selections there or take the view that once this Aviva pot is diversified and sensible, then it is ok to replicate that elsewhere in our portfolio?

Thanks in advance for any thoughts.

Just an ambitious amateur opinion here, as I am in a similar situation.

I have money in a US 401(a) (defined contribution) pension, which is mostly invested in US equities, diversified across different asset classes and risk profiles.

I have a UK final salary pension (10 years invested).

I pay AVCs to the Pru which are invested in a UK tracker and a Global tracker and two bond funds.

I have S&S ISAs across several global and UK funds of different asset classes and risk profiles, all but one held with Fidelity.

I'm 57 so I have very little high-risk funds.

Through no real design, my total portfolio value across the US 401k, Pru AVCs, and Fidelity S&S ISAs is split almost evenly 33%/33%/33%.

I have just opened a SIPP with Fidelity and am asking myself the same question as you - choose something different? Replicate what I have elsewhere?


I'm still working it out, but maybe the biggest consideration is thinking about when and in what order I will want to cash in these investments. For example, I plan to take the Pru AVC investments as my 25% tax-free lump sum in about 3-4 years and so the investments there are relatively cautious. I can't risk volatility because I need to take the lump at a specific time, relatively soon.

The Fidelity SIPP will provide some tax-free withdrawals and other taxed income withdrawals after I retire/semi-retire. Same thing with the S&S ISAs. Across these, I'll pick and choose where I withdraw from based on the best tax situation (although whatever happens, I will likely always pay tax and will never go into the 40% bracket in retirement).

For me, as I plan to drip-withdraw during retirement over an extended period of time from both the Fidelity ISAs and the Fidelity SIPP, at the moment it seems to make sense to simply set them up to almost mirror each other.

For you, I'd say if you are looking at ISAs, rather than SIPP, it implies you may use some of these investments before you retire - so your different time frame would lead to a different investment outlook. If these "savings" might be used to purchase a new house in 5 years, then you'd take less risk than with your pension investments which you won't need for 20 years.


(Sorry, long story about ME, but I thought my thinking might be relevant to your thought process).

Temrael

Thanks Dun, yep the plan for the ISAs would be to fund the gap between a hopefully early retirement and when the various pension pots become accesible.

I'm wondering if this thread might be more appropriate in the savings/investment board as it's primarily about fund selection.