Thoughts on my planned pension portfolio / investment

ferox666

Hi all

I am in aged in early 30s, intended retirement age approx 60-65.

Currently it's all (through a company stakeholder pension) in Scottish Widows "Pension Portfolio 2" which appears to have done OK in last few years? But I have struggled to find exact performance stats for this exact fund or a breakdown of the holdings.
To diversify/split I am planning to have:

45% left in "Pension Portfolio 2" since it has been effective so far with no need for me to do anything
25% in HENDERSON CAUTIOUS MANAGED
10% in NEWTON REAL RETURN
10% in NEWTON GLOBAL EQUITY
5% in Shroder Managed Balanced
5% in Artemis UK Smaller Companies (want exposure to this fund)

Any thoughts on diversification and risk here and the funds in general? They seem the best for what I want based on initial research.
I am particularly interested in views on keeping part in the SW fund as they don't feature in any top rated funds on HL, it was their default fund for me saying i was (i believe) medium risk.

I am probably a 3-4 on a scale of 1 to 10 regarding risk...want something that I can just check once a year and leave them to the investments/allocation etc. I do want the bulk in general / cautious managed but splitting amongst a couple of similar funds to reduce risk of all eggs in one basket (although I know still staying in one sector).

I do wonder though if SW's charges are competitive though and whether I'd be better making a SIPP to hold future contributions or if it's worth opening stakeholder with someone else. The amounts involved are not much at this stage so maybe not worthwhile.

Appreciate any feedback
thanks

bowlhead99

See previous thread here.

https://forums.moneysavingexpert.com/discussion/4731501

If you go to Trustnet.com you can look it up, here

http://www.trustnet.com/Factsheets/Factsheet.aspx?univ=P&fundCode=QGF29&pagetype=overview

Look it up and see if the holdings would change your view on what, if anything, to complement it with. It is basically a fund containing other funds which give you exposure to the major markets, principally using indexes. It will not be a "best buy" on HL because HL give you access to funds available on the retail DIY market and their marketing team promotes the ones which make them money. By contrast, this is a fund offered by a pension company to be accessed by intermediaries like IFAs and company pension schemes.

The charges are likely to be fine (especially for small amounts) s they will have been arranged by your employer. If you leave the company you may get a different fee scale. If you are still with the employer there seems no point going it alone with a SIPP and missing out on their ongoing contributions. Personally I do run a SIPP alongside my employer's scheme but I have enough in there to make it worthwhile and I want to hold more exotic investments.

You say the funds you picked for the other half (which doesn't stay in Portfolio Two) seem to be the "best for what you want". But half of it you reckon Cautious Managed...?

You aren't planning to retire for three decades and so have plenty of time to ride out the ups and downs. The Portfolio Two is currently 85% equities (broad global spread) which seems fine to me for that timescale. While Henderson cautious managed is currently 50% UK-focused equity and 50% cash and bonds.

Henderson will of course change the mix over time based on their world view and the fund's strategy - but this fund is something to give more downside protection and less of the growth that you need to fund the last three decades of your life starting three decades from now... If your pot is relatively small now, you have little to lose and 30 years more contributions to come. So some might question the wisdom of being over cautious for a long term view.

princeofpounds

There is nothing there that rings alarm bells. That's not to say it's likely to be optimal (as we an only say on a probability basis) - that requires quite a bit more study and knowledge of your personal circumstances. But I wouldn't look at it and think you were stupid.


The main issue is that 30 is probably a bit too early to be getting too cautious. There is a risk in being too conservative and thereby lagging your pension return objectives; it is called shortfall risk.


Being able to look at your pension once a year and not worry about large losses is a false sense of security if it means you are sacrificing your opportunity to grow your investments. Although it's probably better than taking too much risk and then reacting badly to it by selling in down markets.


However, given markets have done so well over recent years, I really wouldn't be worrying too much.


It would be in the back of my mind however that the next time I start reading about market crashes happening I might want to dial up the risk in the portfolio.


I'm only talking a modest change in emphasis here - The pension portfolio 2 is 85% equity which is fairly normal for someone in your position. But the cautious/balanced funds are more bond-heavy than would be usual for someone of your age.

dunstonh

Any thoughts on diversification and risk here and the funds in general? They seem the best for what I want based on initial research.

What structure are you following? I can't immediately identify it from that make up. Or is it a random put together (i.e. i think i will put 5% in that one and 10% in that one....)

I am particularly interested in views on keeping part in the SW fund as they don't feature in any top rated funds on HL,

Forget HL and their marketing list. They are not giving views from the whole of market. They promote funds available via their platform.

I do wonder though if SW's charges are competitive though and whether I'd be better making a SIPP to hold future contributions or if it's worth opening stakeholder with someone else.

Stakeholder pensions are old hat most of the time now. It has become a niche product. SW's is fairly default in what a stakeholder sets out to achieve. However, are you sure you have a stakeholder pension as some of those funds are not what you expect to see on a stakeholder because of the charging cap. Is it a group personal pension?

If its through the employer then leaving it would mean giving up the employer contribution.

atush

I agree witgh some of the above, it is early days to be too cautious.

peterg1965

dunstonh wrote: »

Forget HL and their marketing list. They are not giving views from the whole of market. They promote funds available via their platform.



.

Dunstonh, HL offer about 2400 OEICs and Unit Trusts I think. I realise now that they are not 'whole of market' but the range they offer is hardly restrictive and must represent a substantial proportion of funds available.

I have just taken advice from HL on my portfolio and questioned when they said they were not 'whole of market', this surprised me, but i guess it shouldn't have.

dunstonh

Dunstonh, HL offer about 2400 OEICs and Unit Trusts I think. I realise now that they are not 'whole of market' but the range they offer is hardly restrictive and must represent a substantial proportion of funds available.

The funds universe is something like 50,000. They review a very few select funds from the UT/OEIC universe. Often the ones that want HL to promote them.

In respect of this thread, the OP had Scot Wid funds. You wont find funds on his contract on the HL platform. So he/she was looking at the HL "research" and questioning why their funds were not there. Some Fund houses pay to get their funds reviewed. Some are willing to pay a lot of money. Some, less so. Some dont pay anything. So, always be on guard when a product provider is promoting a particular fund.

I have just taken advice from HL on my portfolio

Actual advice on from their restricted advice arm or marketing from the DIY platform?

HL can't really be IFAs as an IFA would be unlikely to recommend the HL platform (even if it was available to IFAs) as it is expensive compared to the platforms available to IFAs. They went restricted last year. This is not to criticise them. I have always said their DIY offering, whilst expensive, is well put together and functions well. You just have to be wary of their marketing which is often misunderstood to be advice when it is not.

peterg1965

dunstonh wrote: »

The funds universe is something like 50,000. They review a very few select funds from the UT/OEIC universe. Often the ones that want HL to promote them.

In respect of this thread, the OP had Scot Wid funds. You wont find funds on his contract on the HL platform. So he/she was looking at the HL "research" and questioning why their funds were not there. Some Fund houses pay to get their funds reviewed. Some are willing to pay a lot of money. Some, less so. Some dont pay anything. So, always be on guard when a product provider is promoting a particular fund.



Actual advice on from their restricted advice arm or marketing from the DIY platform?

HL can't really be IFAs as an IFA would be unlikely to recommend the HL platform (even if it was available to IFAs) as it is expensive compared to the platforms available to IFAs. They went restricted last year. This is not to criticise them. I have always said their DIY offering, whilst expensive, is well put together and functions well. You just have to be wary of their marketing which is often misunderstood to be advice when it is not.

Thanks. I have taken formal advice from one of their FAs. I asked for it as I wanted professional assistance in re organising my portfolio. I have received 'one off' advice, no annual review as that was right for me. I am broadly content and happy to take the advice. They do heavily push the Wealth 150+ range as the 'best of the best' in terms of funds and fund managers and funds from that group of funds + one tracker (US Index) forms the basis of my new portfolio.

I wasn't aware there were so many fund options - 50,000!

dunstonh

I wasn't aware there were so many fund options - 50,000!

The vast majority are duplicates or no longer available on new contracts. e.g. xyz fund which has a version for the life contract, stakeholder version and personal pension version. You then have the mirror funds of the unit trust versions. So, you can trim it down quite a lot from there. As time goes on, that number will drop significantly as the historical stuff matures.

ferox666

Thankyou everyone for the replies much appreciated.

I take the point about not being overly cautious but didn't think 25% in "cautious managed" (which contains a proportion of equities so actual cautious element much less than 25%) was too much.

Does anyone have knowledge/thoughts on the Newton Global Equity fund. It seems to have performed well/comparable to others in the sector and perhaps increases the risk/growth potential a bit if I move more there.

On reflection I am not as satisfied with the SW growth figures as I thought, after adding up what has went in over 6 years (my gross contribution plus employers cont) performance seems mediocre/poor compared to other funds. Total value less total paid in over 6 years (admittedly contributions were lower in first 4years) is only 19.5% more than total paid in. I can't be sure the trustnet page for "sw pension portfolio 2" is the same one I'm in it's very unclear.

Yes, the %'s were really just rough guesses by me to spread risk, e.g. "10% in that one" after some research, I know it's not perfect but I felt it offered some diversification / spread risk while still allowing growth.

Is people's opinion that this SW fund a good option after all? I just feared they were like almost (but not quite) just a "default" high street bank style option which would not outperform specialist fund managers like Artemis, Newton, Jupiter etc. But I may be wrong and as you say maybe I have relied too much on what I've seen on HL. I am suspicious that certain funds now on HL only show 3 years performance despite being long running funds, I wonder if poor performance is being hidden at times or am I being cynical.

BTW you are correct it's an employers group pension through SW so not an actual stakeholder then I guess.

Thoughts on the following weighting would be much appreciated, I do accept there is less growth potential being "cautious" but for now I would like a portion allocated that way for peace of mind.

40% SW "Pension Portfolio 2"
20% in HENDERSON CAUTIOUS MANAGED
10% in NEWTON REAL RETURN
25% in NEWTON GLOBAL EQUITY
5% in Shroder Managed Balanced (this didn't seem cautious?)

ferox666

http://factsheets.financialexpress.net/swfc/QG30_SCD.pdf - this may be the SW fund but still not sure (there seems to be other SW funds with "two" but of different "series")...the chart suggests some significant value drops of 25% from peak in the last year...