SIPP - Most common fund choices?

dunstonh

Ok. And if I invest in the Life Strategy / Consensus 85 funds, are these actively managed? For example, will the fund manager act if its underperforming?

These are active passives. i.e. the only management decision is the asset allocation. The underlying assets are passives. There are no fund managers involved as its done by software/committee and there is nothing to act on.

And if I have a ftse tracker, and 1 company goes bust, do I only follow the remaining 99 companies, or will the new company in the index, also be followed?

No sensible investor invests in the FTSE100. However, if you are using it purely as an example, then the constituents of the FTSE100 are kept under review and new companies join and leave on a regular basis. One dropping out of the FTSE100 is replaced by another moving up.

Tom2023

dunstonh wrote: »

Yes. That would not be at all typical of the average UK consumer.

The average UK consumer has a risk tolerance and behavioural attitude and capacity for loss closer to VLS40 and VLS60.

In over 20 years of giving advice, I have yet to meet someone with that level of investment risk. However, advice clients do tend to be lower risk than DIY investors. Advisers tend to focus on making people aware of the downside periods and making sure you can handle them. Usually putting it in monetary terms. For example, VLS100 has loss potential of around 50%. So, if you had £100k invested in that fund, how would you react if you got your statement through and your £100k was now worth £50k?

The FOS consider the average consumer to be cautious (more in line with VLS40 or VLS60).

DIY investors do seem to be higher risk in investment selection. I think many of them dont know the real risks and do not realise what they have coming very soon.

Over a 30 year period which of these VLS funds is most likely to have the best return?

dunstonh

Tom2023 wrote: »

Over a 30 year period which of these VLS funds is most likely to have the best return?

VLS100 in most 30 year periods but not all. Remember that a 50% loss requires a 100% gain to get back to where you started. So, an early loss in your investment period could put you at a big disadvantage if its single premium.

Also, you need to consider that the majority of people cannot handle such a loss and are more likely to withdraw their money (or move significantly lower risk) and not have it in there over 30 years.

Tom2023

dunstonh wrote: »

VLS100 in most 30 year periods but not all. Remember that a 50% loss requires a 100% gain to get back to where you started. So, an early loss in your investment period could put you at a big disadvantage if its single premium.

Also, you need to consider that the majority of people cannot handle such a loss and are more likely to withdraw their money (or move significantly lower risk) and not have it in there over 30 years.

Perhaps the best strategy is to invest your money when the market is tanking then don't look at the investment for 25 years

bostonerimus

Historically a 60/40 equity to bond allocation has been a good balance of risk and return. You might well get higher returns by owning more equities but the gains are relatively small and you take on a disproportionate amount of risk to get them. Now if you are 20 years old and can ride out some down turns a 100% equity portfolio might be ok. Also if you have a large portfolio and don't mind the possibility of large losses, that's a situation where the risk of a high equity allocation might also be appropriate.

dunstonh

Tom2023 wrote: »

Perhaps the best strategy is to invest your money when the market is tanking then don't look at the investment for 25 years

Or invest with a risk profile that matches your needs and objectives and isnt going to scare the hell out of you when a statement comes in just at the wrong time.

Susy909

Thanks. A Financial advisor quoted me 3% get them to do the work. Do you think they would just do the same what I'm going to do:

33% Consensus 85
33% Vanguard Life 60
33% Legal&Gen Multi index


Is there are major differences between these 3 funds? Are they the most popular ones? Any others that are popular?

Malthusian

Tom2023 wrote: »

Perhaps the best strategy is to invest your money when the market is tanking then don't look at the investment for 25 years

No, because the market only tanks about one year in ten, and anyone invested in cash 90% of the time is going to see little at best in terms of return. In addition, you only know it was "tanking" in hindsight, after the market has gone back up. Before the market goes back up, everyone talks about decades of pain, the Baltic Dry Index and "new normals".

In other words, if you wait for the market to tank, you will be sitting out of the market missing out on a lot of growth, and by the time the market has actually tanked and given you your buying opportunity (2009-style) you've missed it.

The two aims of attempting to time the market and attempting to not look at statements for 25 years are incompatible. Someone who thinks they can time the market would be looking at their statement constantly; while someone who just wants to close their eyes and take the plunge has to just do it, not stand on the edge of the cliff waiting for the water to stop churning.

dunstonh

Susy909 wrote: »

Thanks. A Financial advisor quoted me 3% get them to do the work. Do you think they would just do the same what I'm going to do:

33% Consensus 85
33% Vanguard Life 60
33% Legal&Gen Multi index


Is there are major differences between these 3 funds? Are they the most popular ones? Any others that are popular?

If your fund value was small, then they may pick a multi-asset fund (unlike to do what you have). If it was larger, more likely to use a bespoke model portfolio.

Audaxer

dunstonh wrote: »

I have no issues with multiple multi-asset funds. Indeed, I frequently do that as a way to keep within the £50k FSCS limits.

dunstonh, from previous threads/posts I thought you are other posters didn't think the £50k FSCS limit was a concern as regard major fund houses and platforms.

I have been a bit wary about investing over £50k in either one fund house or one platform, but I thought I was being a bit paranoid as I seemed to be alone in being concerned about that. Are you saying it is safer to keep with the £50k limit as regards platforms and fund houses?