SIPP investment advice

SnoopyDog

Hi

I am in the process of transferring £120k in a LV flexible transitions pension account and then I am planning on splitting it as per below.

I am a novice investor and have made my own decisions from reading around online in the last few weeks. Age 43 looking to retire around 65 and around 7/10 ATR. One other DCS pension with current employer worth around £35k with about £250 pm contribution split between Global active and a Shariah fund.

Plan is to go as follows:

50% Vanguard LifeStrategy 60/40
10% Fidelity Index World Series2
10% Fidelity Index US Series2
10% Invesco Asian Series2
10% Jupiter India
5% Schroeder US Mid Cap
5% Black Global Property Equity Tracker

My general feeling was the first 3 would provide lower cost tracker funds and the next 3 a bit more of a chance for higher returns and the Black Rock for a bit of extra diversification.

Never invested before (apart from other workplace pension) so any opinions or feedback would be greatly appreciated before I take the plunge next week, anyone think I am making any glaring mistakes given the current economic climate?

Was maybe considering the Vanguard 40/60 instead to begin with??

Cheers :beer:

AnotherJoe

Seems to me, that roughly speaking, what you are doing by combining VLS 60/40 with another 30 of overlapping all equity funds (whose constituents will have avery high overlaps) , is creating your own VLS75 or 80, thereabouts, with a little bit in India and Property.

Was that your intent ? If so might as well buy VLS80 (85%) and as you were in the India and Property.

Or if that's too much risk for you, replace VLS80 above with 60. Or 40 depending how risk averse you are.

As for mistakes really it's about risk levels you are happy to take. Your £120k could easily fall to £100k or less in a few months. If that would cause you to panic and sell then dial the risk level down.

The only mistake I'd say, is when you mention "the current economic climate".

Don't take this personally but you aren't the first person by a long way to say they are a complete newbie when it comes to investments but then talk about investing in a particular way because of "the current economic climate " or similar words as if they are experts and know what's happening.

Yet the experts don't, so why would you ? I certainly i don't and am not setting myself up as an expert by the way, unless it's an expert in not knowing what will happen, and the records show that experts have no more clue than Paul the Octopus what the markets going to do.

bigadaj

SnoopyDog wrote: »

Hi

I am in the process of transferring £120k in a LV flexible transitions pension account and then I am planning on splitting it as per below.

I am a novice investor and have made my own decisions from reading around online in the last few weeks. Age 43 looking to retire around 65 and around 7/10 ATR. One other DCS pension with current employer worth around £35k with about £250 pm contribution split between Global active and a Shariah fund.

Plan is to go as follows:

50% Vanguard LifeStrategy 60/40
10% Fidelity Index World Series2
10% Fidelity Index US Series2
10% Invesco Asian Series2
10% Jupiter India
5% Schroeder US Mid Cap
5% Black Global Property Equity Tracker

My general feeling was the first 3 would provide lower cost tracker funds and the next 3 a bit more of a chance for higher returns and the Black Rock for a bit of extra diversification.

Never invested before (apart from other workplace pension) so any opinions or feedback would be greatly appreciated before I take the plunge next week, anyone think I am making any glaring mistakes given the current economic climate?

Was maybe considering the Vanguard 40/60 instead to begin with??

Cheers :beer:

If you want the general structure, then I wouldn't be using lifestrategy with the other funds. I'd ip the amount in a global tracker, potentially using a separate bond fund, and maybe a uk tracker if you are keen on the overweight bias for the uk that you get with lifestratgey.

Have you plugged that in as a dummy portfolio into trustnet or Morningstar, that would at least clarify your exact weightings in terms of sector, geography, asset class etc and clarify whether your proposed spilt is appropriate.

SnoopyDog

AnotherJoe wrote: »

Seems to me, that roughly speaking, what you are doing by combining VLS 60/40 with another 30 of overlapping all equity funds (whose constituents will have avery high overlaps) , is creating your own VLS75 or 80, thereabouts, with a little bit in India and Property.

Was that your intent ? If so might as well buy VLS80 (85%) and as you were in the India and Property.

Or if that's too much risk for you, replace VLS80 above with 60. Or 40 depending how risk averse you are.

As for mistakes really it's about risk levels you are happy to take. Your £120k could easily fall to £100k or less in a few months. If that would cause you to panic and sell then dial the risk level down.

The only mistake I'd say, is when you mention "the current economic climate".

Don't take this personally but you aren't the first person by a long way to say they are a complete newbie when it comes to investments but then talk about investing in a particular way because of "the current economic climate " or similar words as if they are experts and know what's happening.

Yet the experts don't, so why would you ? I certainly i don't and am not setting myself up as an expert by the way, unless it's an expert in not knowing what will happen, and the records show that experts have no more clue than Paul the Octopus what the markets going to do.

Thanks, good food for thought re the overlapping, I may be over complicating things due to the huge choice of options. I was thinking I was spreading the investment using the other funds but I can see it is not making much difference.

I remember Paul The Octopus new his footy!! I think just reading lots of different websites and posts the negative ones stick in your mind when like you say no one really knows what will happen so I just need to remember it's the long term that counts!

SnoopyDog

bigadaj wrote: »

If you want the general structure, then I wouldn't be using lifestrategy with the other funds. I'd ip the amount in a global tracker, potentially using a separate bond fund, and maybe a uk tracker if you are keen on the overweight bias for the uk that you get with lifestratgey.

Have you plugged that in as a dummy portfolio into trustnet or Morningstar, that would at least clarify your exact weightings in terms of sector, geography, asset class etc and clarify whether your proposed spilt is appropriate.

I didn't know about the dummy portfolios so I will give that a go to check the weightings, thanks for bringing that to my attention.

I was actually keen to be underweight in the UK so that that is why I put in the Fidelity tracker which seemed less UK weighted and the Schroeder one to be more US so will get them all in the dummy one you mention and see where I actually am.

dunstonh

I am a novice investor

OK, so why are you building a bespoke portfolio with a random selection of funds?

My general feeling was the first 3 would provide lower cost tracker funds and the next 3 a bit more of a chance for higher returns and the Black Rock for a bit of extra diversification.

VLS is not a tracker fund. It is a fettered fund of funds. You pay more because it is that and not a tracker.

anyone think I am making any glaring mistakes given the current economic climate?

What is the current economic climate and how have you structured your portfolio and fund selection to reflect that?

The professional model portfolio allocations are fluid and move around throughout the economic cycle. However, it tends to be more subtle changes. So, how is your sector allocations adjusted to meet what you believe is the current economic climate?

How does using funds of funds with a rigid allocation and a bunch of single sector funds work in achieving that? If you were building a model portfolio, you wouldnt normally use a multi-asset fund.

AnotherJoe

SnoopyDog wrote: »

I didn't know about the dummy portfolios so I will give that a go to check the weightings, thanks for bringing that to my attention.

I was actually keen to be underweight in the UK so that that is why I put in the Fidelity tracker which seemed less UK weighted and the Schroeder one to be more US so will get them all in the dummy one you mention and see where I actually am.

Then simply buy either an "ex-UK" (=excludes UK) global tracker along with an all-UK tracker in proportions that meet your required UK makeup, or you can buy global trackers that include the UK in its average global contribution, which is about 7% IIRC. ( Maybe thats the fidelity tracker ??? )

EdSwippet

dunstonh wrote: »

VLS is not a tracker fund. It is a fettered fund of funds. You pay more because it is that and not a tracker.

That seems a touch misleading to me. Vanguard LifeStrategy funds are funds of tracker funds, where the allocation across asset classes is fixed through automatic rebalancing. In that sense they will behave just like trackers, for better or for worse.

LifeStrategy fund charges are somewhat higher than if you were to buy the individual Vanguard tracker fund components on their own, though. And in my opinion that's a slight black mark against Vanguard. The UK equity bias in the funds is also a bit suspect; only history will tell whether it is benefit, drawback, or just neutral.

But overall, LifeStrategy funds are an excellent vehicle for passive investors with no interest in continually researching markets, funds, etc, who want a low cost hands-off approach to long term retirement saving.

dunstonh

That seems a touch misleading to me. Vanguard LifeStrategy funds are funds of tracker funds, where the allocation across asset classes is fixed through automatic rebalancing. In that sense they will behave just like trackers, for better or for worse.

Yes, the underlying funds used in the fund of funds are passive but they are rebalanced to their management strategy and it costs twice the amount as holding them individually to work to your own strategy.

VLS is effectively a portfolio in its own right. It is a structured investment strategy with management decisions already made.

But overall, LifeStrategy funds are an excellent vehicle for passive investors with no interest in continually researching markets, funds, etc, who want a low cost hands-off approach to long term retirement saving.

But the OP is looking to run his own bespoke portfolio. So, that makes the use of VLS questionable.

bostonerimus

I would not have any actively managed funds in the portfolio. Go with either 100% Vanguard Life Strategy and sit back and relax or simply buy the tracker funds that make up Vanguard Life Strategy and rebalance occasionally.

dunstonh

bostonerimus wrote: »

I would not have any actively managed funds in the portfolio. Go with either 100% Vanguard Life Strategy and sit back and relax or simply buy the tracker funds that make up Vanguard Life Strategy and rebalance occasionally.

Why wouldn't you? - and don't refer to US-based research about how managed underperforms which does not apply to the UK market.

Plenty of managed funds out there that add value. Being biased to one method (whether managed or passive) is never a good thing.

Plus, if you buy a selection of passive funds and build them to your own allocations then you are making management decisions. VLS is a collection of passives allocated using management decisions. Everything has a management decision.

I had someone recently ask why I wasn't using Vanguard for them as they had read so much about it being so good and cheap. The VLS equivalent for their risk profile had returned 81.20% vs the 94.55% in the same period for what they had.

There is more to life than Vanguard. It is a good option but you must not become blinkered into thinking it is the only option or the best option.