L&G Global Equity 70:30 Index Fund value dropping

carman100

Firstly I have to say that I am crap with how pensions work so you will have to bare with me.

I had a stakeholder pension with the company I work for, originally managed by Invesco. The company stopped doing that stakeholder and started a new one up. Everyone who had the Invesco stakeholder had their pension moved to Legal and General, no further funds were put into them. It is currently invested in the "L&G Global Equity 70:30 Index Fund".

I've had my yearly statements and each one shows the pension fund value increase each year. Stopped having statements last year and had to register online. Did this a few weeks ago and noticed the pension fund had dropped by 2k since December and a further £700 since I registered. Should I be doing something about this or is it natural?

I'm charged a monthly management fee of £18 so expect L&G to be doing what is right for it. Am I panicking over nothing?

Also, should I leave this pension where it is or transfer it to the newer pension I have with the company I work for which is also invested in the "L&G Global Equity 70:30 Index Fund".

Old pension estimated pot is currently at £36,401. (£36,505 last Friday!).

Thanks

dunstonh

I've had my yearly statements and each one shows the pension fund value increase each year.

Only because the years you have had it have been growth years. That would not be the case in negative years or nothing years.

Did this a few weeks ago and noticed the pension fund had dropped by 2k since December and a further £700 since I registered. Should I be doing something about this or is it natural?

its natural. We had a stockmarket crash (just about) during that period. So, a drop is normal.

I'm charged a monthly management fee of £18 so expect L&G to be doing what is right for it. Am I panicking over nothing?

L&G are just administrator. There is no management in the fund you have as its an index tracker. it will do what it will do and no-one can influence it.

However, there is no need to panic. Periods of decline are needed to get long term returns. Without short term losses, the long term returns will be lower. The money you pay into it now is buying investments cheaper than they were before. These payments will make more than the ones you bought in october or november.

princeofpounds

Losses are very normal in investing. Losses far in excess of what you have seen are very normal in investing.


You could even argue that the 7 years of consecutive gains that index (and markets in general) have had is the abnormal feature. A smooth ride is not something you should expect.


You need to adjust your entire mindset, otherwise you will freak out when you get a proper sell-off. Investing involves volatility and risk, which is why you get a reward.


The thing that matters is not the return in a given year.


The thing that matters is the average return over an investing lifetime. That is subtly but massively different.





Look at this chart (it is for the US, but the concept applies in general terms) - over a year, almost anything can happen, good or bad. But over long term time periods, on average, returns get more and more reliable.


It is important to keep contributing in good and bad times to get that average outcome, because typically the bad times are when people overestimate how bad the future is likely to be, and as a result the investments are sold too cheap and the subsequent returns tend to be highest.


Hope that helps.