SIPP Fund Advice

Thrugelmir

Rekw2000 wrote: »

I have just opened a Best Invest SIPP with 3 funds

Threadneedle UK equity income
Standard Life UK equity Income
Artemis Global Income

All three funds dropped in value straight away, should I hold out, is this a long term game?

TIA

Markets gyrate up and down every day. As the value of the investments held by the funds are themselves traded. All part of investing. If you are expecting linear growth be ready for major upsets if you are a long term investor. As the swings at times can be extreme.

Johnny_Doe

Interesting read, what would one advise for a 44 year old (standard tax payer) looking to retire at 55.. possibly 60 depending on market performance?

I can fund the 5 years 55-60 with cash. I'm fairly happy to take some risk, although from the early noughties tech bubble I lost out and one of my funds has still not recovered 100% (currently 69% after 15 yrs!) (if fund drops 40% when I'm 55 I'll leave it invested until it hopefully recovers!)

After extensive research I picked the following funds and they are split equally (20% each). Would appreciate some feedback on my choices thanks very much..

IFSL TILNEY BESTINVEST DEFENSIVE PORTFOLIO CLEAN Acc
AXA FRAMLINGTON GLOBAL OPPORTUNITIES Z Acc
ARTEMIS GLOBAL GROWTH I Acc
FUNDSMITH EQUITY I Acc
VANGUARD LIFESTRATEGY 100% EQUITY Acc

AlanP_2

Johnny_Doe wrote: »

Interesting read, what would one advise for a 44 year old (standard tax payer) looking to retire at 55.. possibly 60 depending on market performance?

I can fund the 5 years 55-60 with cash. I'm fairly happy to take some risk, although from the early noughties tech bubble I lost out and one of my funds has still not recovered 100% (currently 69% after 15 yrs!) (if fund drops 40% when I'm 55 I'll leave it invested until it hopefully recovers!)

After extensive research I picked the following funds and they are split equally (20% each). Would appreciate some feedback on my choices thanks very much..

IFSL TILNEY BESTINVEST DEFENSIVE PORTFOLIO CLEAN Acc
AXA FRAMLINGTON GLOBAL OPPORTUNITIES Z Acc
ARTEMIS GLOBAL GROWTH I Acc
FUNDSMITH EQUITY I Acc
VANGUARD LIFESTRATEGY 100% EQUITY Acc

What logic was applied to the selections? What is your target Asset Allocation across main geographic markets, company sizes, sectors etc?

Without looking all the funds, I am only familiar with Vanguard LS & Fundsmith, I would say it is a very "volatile" investment that will gyrate substantially at times.

As you approach needing the money you should consider moving slowly away from equities to what have been typically more stable options like Bonds.

For example move down the LS range to try and "lock in" the profit earned to date.

The plan you have for accessing the money post retirement comes into play as well though. At your age you are likely to live to 85/90 I would have thought (if in reasonable health) so need that pot to last 30+ years and grow throughout that period to at least match inflation.

Moving to 100% Bonds / Fixed Interest is unlikely to achieve that so you will always need to have a large proportion in equities that "could" provide good growth.

What is your overall current situation like as regards pension - anything built up over the previous 20 or so years whilst working?

Don't forget your State Pension will kick in at some stage (obtain an estimate through your Personal Tax Account) so you might like to think about 3 phases of "retirement" to smooth your income.

55/60 - CASH
60/State Pension Age - Personal Pension
SPA onward - Reduced income from PP + State Pension

Rekw2000

Thanks for all the feedback.
I have opted for an Income fund which also has some capital growth, I will reinvest the dividends.
I have now lowered the risk and transferred the Standard Life Income fund to a Vanguard Life Strategy with a 40% equities 60% bonds. This will mean the Asset Allocation will be less dependent on the UK market and less volatile.
I have kept the the Artemis Global Income fund ACC but might switch it to the Growth fund, any thoughts?

bowlhead99

Rekw2000 wrote: »

I have kept the the Artemis Global Income fund ACC but might switch it to the Growth fund, any thoughts?

It depends whether you feel that a fund which focuses on buying shares in companies which the managers believe are able to pay higher than average sustainable dividends, and which reinvest those dividends, will over the course of your planned investment timeline deliver a greater or lesser return than a fund which focuses on buying shares in companies which the managers believe have higher capital growth prospects.

The right answer will likely be that each type of fund will perform better than the other during certain prevailing market conditions.

Equity income funds have done well in recent years, as low interest rates worldwide have pushed income-seeking investors towards buying companies which generate cash or can afford to pay higher cash amounts as dividends, and the demand has caused the price of such companies to rise. Will that reverse over the next X years? Will industries or company types which more traditionally formed part of "growth" portfolios now take a turn in the sun?

If you don't know what you want, maybe you should have both.

Thrugelmir

Johnny_Doe wrote: »

although from the early noughties tech bubble I lost out and one of my funds has still not recovered 100% (currently 69% after 15 yrs!)

Lost capital is just that. Lost. Capital preservation should be a key consideration when investing. In the tech bubble era was plainly obvious that some companies had market valuations totally out of alignment with their trading performance and business model. Lastminute.com being the most high profile.

Johnny_Doe

Hindsight is a wonderful thing!