Advice on pension

berbatov10

Following my other posts here what are the views of making the following SIPP investments. They would seem to do the same as a VLS fund but being ETF's its a cheaper option.

Global equity 50% Vanguard FTSE All-World ETF
Government bonds (Gilts) 50% Vanguard UK Government Bond ETF
Your thoughts

jamesd

Those don't meet your no risk requirement.

The first can be expected to drop by 20% two or three times a decade and 45% once or twice a decade.

The second can be expected to drop by about 10% at similar frequency but it also has about 20% of unrecoverable loss built in due to the current high price of gilts. those prices will fall once interest rates rise and since we're at lows now that haven't been seen for hundreds of years, you're not likely to recover that drop in your lifetime.

Each fund is fine as part of a mixture for someone who knows what to expect from them and thinks that this meets their objectives. Personally I'm avoiding gilts because of the one way down risk. If you want them, look for a managed fund that is either in the strategic bond sector or says that it is highly concentrated in short duration gilts, because short duration gilts are the ones that will suffer least. Avoid "long gilt" or similar funds because long gilts will suffer the most. Short and long refer to the time before the government repays the money, short is up to a year to two perhaps, long can be fifteen plus years.

berbatov10

Hi James thanks for the quick reply. I guess everything has 'some risk'. I wonder then if I should just plum for either VLS 60/40 or a straight forward personal pension, though as I posted elsewhere the charges seems to be around 1% for the ones I have viewed