Fund thoughts

roundabouthere

One of my friends was talking over the weekend about his pension and asked me what my thoughts were on his funds. Apparently he's had then invested for a good few years like this. Based on what he was telling me he said he hopes to retire in around 20 years.

I didn't really have an idea so thought I'd ask the good folks here who may have a better idea

The funds are invested each month as follows;
Aberdeen multi asset pension fund. 30%
Investec U.K. Smaller companies 10%
Standard life global smaller companies 10%
Jp Morgan natural resources 10%
Liontrust global income pension fund 10%
Standard life Asia Pacific excluding Japan equity pension 10%
Standard life North American pension 10%
Standard life property pension 10%

AnotherJoe

I'd say they are all very expensive ways of buying those collective investments.
Can't comment on the allocation much though Trustnet doesn't think much of the Aberdeen one and other than what looks like a bump this year possibly due to Sterling devaluation it's performance isn't up to much.

roundabouthere

I think he's tied to a certain choice through standard life.

Are you saying that it is cheaper to have just one fund or that all of those funds listed generally have a high management charge

bigadaj

roundabouthere wrote: »

I think he's tied to a certain choice through standard life.

Are you saying that it is cheaper to have just one fund or that all of those funds listed generally have a high management charge

Almost certainly the latter, and the former can be true but isn't a guarantee.

Older style pensions would generally have higher charges, so looking at transferring to a newer scheme could well save money, 0.5% total annual charge is a useful ballpark figure to target.

Roughly how much money is involved and how long has he held theses funds?

AnotherJoe

roundabouthere wrote: »

I think he's tied to a certain choice through standard life.

Are you saying that it is cheaper to have just one fund or that all of those funds listed generally have a high management charge

The latter. I'm sure there are significantly lower cost examples of all of those available. Though as you say he may be restricted. For example the Aberdeen is 1.6% according to Trustnet, thats very high for a bog-standard 50% UK fund. He could get a 1% off that if say SL do a Vanguard variant.

Standard Life do have some lower cost funds, they may or may not be available to him in his plan since they vary amongst schemes.

The SL Property fund is UK only and has worse performance than the global Blackrock one but if he only wants to be in UK property its an OK choice I guess.

roundabouthere

He said there was about £130k in there when he checked this year.

I'll let him know about the Aberdeen one having high charges / poor performance.

Sounds like he needs to maybe move the Aberdeen one to a different fund

AnotherJoe

It's not just the Aberdeen one. I looked at that as it was the biggest percent of his savings. All the others will be similar but I wasn't going to look each one up !!

Standard Life do have a comparison tool, if he's stuck with SL he could spend a few hours going through each fund looking for an alternative amongst the low cost options. So for example he could search for "smaller" in the funds available, add them to compare and see what their charges are. Not difficult just time consuming but a better investment than watching an hours tv per fund, let's say.

There's a SL website called "how are my funds doing" that's probably the best place to do this.

This by the way is outside the bigger picture of why he has chosen those fund areas. That is outside my scope . Though the Liontrust one looks a bit odd compared to the rest, its income, all the rest are accumulation. If he has 20 years to go, an income fund seems a strange choice.

Linton

AnotherJoe wrote: »

The latter. I'm sure there are significantly lower cost examples of all of those available. Though as you say he may be restricted. For example the Aberdeen is 1.6% according to Trustnet, thats very high for a bog-standard 50% UK fund. He could get a 1% off that if say SL do a Vanguard variant.

Standard Life do have some lower cost funds, they may or may not be available to him in his plan since they vary amongst schemes.

The SL Property fund is UK only and has worse performance than the global Blackrock one but if he only wants to be in UK property its an OK choice I guess.

From Trustnet there are different classes of the Stan Life Aberdeen multi-asset fund, one of which has an OCF of 0.9% and another 1.3%, I cant see one at 1.6%.

Its allocation looks somewhat "unusual": 57.85% UK, 7.41% Europe. 4.56% Japan ,4.31% US.

AnotherJoe

Looking again inside SL (I got the original number i used from Trustnet) I'm seeing this one

http://factsheets.financialexpress.net/SLEFL/BV35_KL.pdf which is 1.51%

roundabouthere

Cheers for that. I'll pass on the info

AnotherJoe

Vanguard do a range of funds which he could use to make up a similar set of allocations and would probably save 1% or more.

And if performance is say 7.5% long term on these funds, then that is increasing his performance by maybe 15% or so.

And on £100k's that's a lot over 20 years especially when compounding is taken into account.