How much home bias?

Legacy_user

It has just occurred to me that having 100% of my sipp in global small cap is a bit nuts, during times of weak £ I should be buying UK small cap instead. Global is good for selling off when the £ is weak, but I don't expect it to get much weaker in the short, medium or long term. I could flit between global and UK as exchange rate changes perhaps

How UK based should the pension be? I will be drawing it here. I could just gave enough UK based funds to cover me when its not an opportune time to draw the global

This pension is just to tide me over between age 57 to 68, I won't depend on it for a lifelong income and could work at that time if I had to, but that's not the idea...

AlanP_2

As much as you have written down in your Asset Allocation Strategy possibly?

If you are going to flit around it probably makes no difference as you won't stick to it anyway :beer:

coyrls

[FONT=&quot]You have already had feedback that your approach is high risk. Moving to UK only small companies will further reduce your diversification and increase risk. You will also struggle to find a passive UK small companies fund; I don’t believe that one exists.[/FONT]

MPN

I think you should spread your risk and invest your SIPP over UK, Global and European funds including multi assett funds as well if you're not sure therefore spreading the risk.

System

The funds I found I'm not sure if they're passive or not, they're more expensive than the world tracker I currently have. There's certainly less competition among the UK ones. Its hard to say if a cheaper price with currency justifies the higher management fee, I suppose it wouldn't take much. Its also hard to say whether a weak pound also causes foreign money to flood in to make UK equities actually more expensive than foreign ones?

The goal here isn't necessarily to spread risk but to control currency risk and possibly get the best value for the exchange rate. I do believe as mentioned that a UK fund will naturally be more concentrated risk than my world one, especially considering the weighting of holdings

The weak pound has made a difference but not a huge one

Bazofts_Revenge

Having similar thoughts on my current company pension which is funded by Salary Sacrifice. I only need it fund between 55 and 65 it is wit Standard life and I currently allocate 33% to SL Vanguard Global growth ex uk, 33 SL Vanguard Euro Growth ex uk and 34% Woodford growth. I am just looking to increase the Woodford percentage whilst the pound is weak. (when I first started the pension I split the allocation 50/50 between the two Vanguard accounts so the uk element is well behind percentage wise.

System

I found my global fund was 6% UK and about 13% europe anyway. Further thinking on it all; if I retire rich then when the pound is strong I won't necessarily be in the UK when I draw it. I saw some UK funds with similar performance but more volatility and cost, I don't think my global fund changed enough recently with the weak pound to worry sufficiently about the consequences of a strong one when I draw it - I would only be gradually drawing in anyway and intend to leave a fair bit behind as an inheritance

Gadfium

How large of a pot are we talking about?

bowlhead99

Gadfium wrote: »

How large of a pot are we talking about?

Not very. He posted on 1 August that he had a small ISA with a fund (£100pm into 60% UK tracker, 25% ex-uk largecap tracker, 15% non equity) and had just started a SIPP at £300pm which was going to be invested 100% in global smallcap.

The thread which went on for 80+ posts was titled "Am I well balanced" and every other poster told him he was not.

This week we get:

MatthewAinsworth wrote:

It has just occurred to me that having 100% of my sipp in global small cap is a bit nuts

Arthur Conan Doyle's protagonist needs more fibre in his diet to get things moving.

dunstonh

Until you get to £10,000 on a regular contribution, it really doesnt matter too much where you invest. The differences in the return lead to just very small amounts in monetary value.

All the time and effort spent in trying to work out your own asset allocation in the belief that you are a better fund manager than the professionals is futile. You are not. Most of them are highly qualified and have sophisticated software and do research you could only dream about doing and they still dont outperform.

There really isnt a point building a portfolio of single sector funds until you get to around £50k plus. Use this time to learn about the subject if you really do fancy being a fund manager.

System

I think I will learn more if only for the fun of it. If it doesn't really matter up to 10k I don't think it'll matter any point beyond, because if I do well I'll be pleased for it.

The fund isn't a single sector of the economy, although maybe a single range of market cap