How to invest money that has been transffered to SIPP

economic

Hi

My parents pension has been transferred to a SIPP and since the funds in the pension could not be transferred, they were all liquidated and so now there is a fairly large cash sum in the SIPP. I am putting together a portfolio of funds for the money to be invested (about £200k). I will do this ASAP so the money remains in the market.

Do you think instead its best to wait for a dip?

Just a caveat - my parents do not need the SIPP money as they have more then enough outside it (+annuities and full state pension). The SIPP will eventually be passed down to me and my brother. So the aim of the SIPP is to use it for long term growth (time horizon over a 20-30 year period). My parents are perfectly happy with whatever is decided. They have S&S ISA which is mainly invested in dividend shares although some is growth based.

The portfolio split i was thinking of is as follows:
- Vanguard 100% Equity Lifestrategy - 40%
- Scottish Mortgage Trust - 20%
- Fundsmith Equity ACC I - 30%
- A biotech fund - 5% ***any suggestions which fund?
- An EM fund - 5% ***any suggestions which fund?

I think i have covered all basis in the above and there seems to be little overlap between SMT and fundsmith. I have also added biotech and EM to cover those areas. Tech is already covered quite extensively in SMT and Fundsmith although i think healthcare/biotech is as well?

Any comments/suggestions on the above? Anything i maybe missing? Do the weightings seem ok?

Thanks

A_T

Seems high risk for a 200K pension pot

Are they prepared for it to halve in value if there's a stock market crash?

capital0ne

economic wrote: »

I am putting together a portfolio of funds for the money to be invested (about £200k). I will do this ASAP so the money remains in the market.

Do you think instead its best to wait for a dip?

The portfolio split i was thinking of is as follows:
- Vanguard 100% Equity Lifestrategy - 40%
- Scottish Mortgage Trust - 20%
- Fundsmith Equity ACC I - 30%
- A biotech fund - 5% ***any suggestions which fund?
- An EM fund - 5% ***any suggestions which fund?

Anything i maybe missing? Do the weightings seem ok?

A few points here:
You contradict yourself, you say this must be invested ASAP and then you say you're waiting for dip? What is it?
You should know the adage Time In The Market - Not Timing The Market!

Next, no property in your portfolio, no bonds or gilts, seems a bit equity heavy.

bowlhead99

A_T wrote: »

Seems high risk for a 200K pension pot

Are they prepared for it to halve in value if there's a stock market crash?

It's money they don't need. If they die next year and he and brother inherits it, presumably he's happy to leave it invested (as he doesn't need the money either and isn't expecting it any time soon in any case) so presumably 60%+ swings are a non issue.

The real issue is perhaps he has told them he knows how to invest it so that they trust him to manage it in the family's best interests, but actually he doesn't know exactly how he wants to invest it so is just going to put most of it in the two most popular conviction-driven equities funds he knows (though not until after a dip) and then ask us for tips on which biotech and emerging markets funds to use instead of doing his own decent due diligence on all the contenders.

Still, if they're not expecting to ever access it themselves and are just expecting him and bro to end up with it, then it might as well be his own money to manage (assuming "I work in a bank so am best placed to make the investment decisions" is fine with the bro who might be equally wealthy and investment savvy and not want access for decades either).

dunstonh

Are you parents prepared to lose more than half the value of their investments in the SIPP?
That spread is very gung ho and there are not many retired people who could handle the volatility you are suggesting.

economic

capital0ne wrote: »

A few points here:
You contradict yourself, you say this must be invested ASAP and then you say you're waiting for dip? What is it?
You should know the adage Time In The Market - Not Timing The Market!

Next, no property in your portfolio, no bonds or gilts, seems a bit equity heavy.

Well what i meant was that i intend to invest it all immediately however i am asking the members of this forum whether it is a good idea to wait for a dip given markets are high. Maybe drip feed in large chunks is best over the course of 3-6 months?

As i said i am looking to invest in the long long term so 20-30 years. Its money purely for me and my brother. for that time frame and given where rates are now i just dont see the point in holding any government bonds. If i were to hold bonds it would purely be to reduce vol and therefore helpful mentally, but i am mentally prepared for large swings being all in equities. keep in mind the original pension was pretty much all in equities in the first place.

economic

bowlhead99 wrote: »

It's money they don't need. If they die next year and he and brother inherits it, presumably he's happy to leave it invested (as he doesn't need the money either and isn't expecting it any time soon in any case) so presumably 60%+ swings are a non issue.

The real issue is perhaps he has told them he knows how to invest it so that they trust him to manage it in the family's best interests, but actually he doesn't know exactly how he wants to invest it so is just going to put most of it in the two most popular conviction-driven equities funds he knows (though not until after a dip) and then ask us for tips on which biotech and emerging markets funds to use instead of doing his own decent due diligence on all the contenders.

Still, if they're not expecting to ever access it themselves and are just expecting him and bro to end up with it, then it might as well be his own money to manage (assuming "I work in a bank so am best placed to make the investment decisions" is fine with the bro who might be equally wealthy and investment savvy and not want access for decades either).

What you say is mostly true. However i am asking for recommendations on biotech and EM as i am fairly new. I am also asking if there is anything i may be missing or if the portfolio construction is "off". I already have investments in fundsmith (and polar capital tech which is similar to SMT) so these funds are not new to me and i know what is invested in them and the type of risk i will be investing in. Keep in mind by far most of the pension was already invested in equities. So even though i am increasing the risk, it will still all be equities just more concentrated given fundsmith and SMT.

perhaps i should reduce the weightings on fudnsmith and SMT to 15% each and have the rest in lifestrategy 100%?

mr_munchem

economic wrote: »

What you say is mostly true. However i am asking for recommendations on biotech and EM as i am fairly new. I am also asking if there is anything i may be missing or if the portfolio construction is "off". I already have investments in fundsmith (and polar capital tech which is similar to SMT) so these funds are not new to me and i know what is invested in them and the type of risk i will be investing in. Keep in mind by far most of the pension was already invested in equities. So even though i am increasing the risk, it will still all be equities just more concentrated given fundsmith and SMT.

perhaps i should reduce the weightings on fudnsmith and SMT to 15% each and have the rest in lifestrategy 100%?

Personally if you're describing yourself as "fairly new" then you need to be taking advice from an IFA (or really your parents need to) on how to invest this. You should not be experimenting on £200k if you have little experience. Also, you say they may not need this money, but you never know what could happen, and I would have thought it would be sensible to have a significant proportion in lower volatility funds just in case your parents need to access it.

To sum up:
- Your parents should see an IFA (it's their money ultimately).

Just my humble opinion :beer:

AnotherJoe

Looks fine to me for a 20+ year investment and not at all dissimilar to one of my SIPPs. I also have biotech, (international biotech Trust.) and EM (Vanguard , VFEM) and Scottish Mortgage !! Instead of vanguard LS I have HMWO as I don’t like the overconcentration that VLS has in the FTSE.

Strangely no one, including the IFA responding here,seems to have understood your clear requirements that the parents aren’t bothered about ups and downs as they won’t be using this / don’t need it and that its a very long investment timescale.

economic

mr_munchem wrote: »

Personally if you're describing yourself as "fairly new" then you need to be taking advice from an IFA (or really your parents need to) on how to invest this. You should not be experimenting on £200k if you have little experience. Also, you say they may not need this money, but you never know what could happen, and I would have thought it would be sensible to have a significant proportion in lower volatility funds just in case your parents need to access it.

To sum up:
- Your parents should see an IFA (it's their money ultimately).

Just my humble opinion :beer:

What I meant was I am new to biotech and em (haven’t invested much in them).

mr_munchem

economic wrote: »

What I meant was I am new to biotech and em (haven’t invested much in them).

Ah my apologies then, my reply would have been very different had I realised!