Fund choice advice

jamesd8221

Evening

I have a workplace pension with Legal and General. My pension is currently invested in their default multi asset fund. This is split roughly as follows:

Equities – 45.5% (UK 7.50%, world 38%)
Bonds and similar – 48%
Properties – 6.5%

I am concerned the fund seems overly cautious with a high allocation to bonds and have therefore been thinking whether this is the best fund for someone my age (35) or whether I should divert some funds to equities.

I have the option of moving all or part of my assets to other funds. I have had a look at the various offerings and have narrowed it down a few that might be suitable:

Global equity tracker (ex UK) – 20%
Global equity tracker 70:30 hedged (70% global, 30% UK, US$ assets hedged) – 20%
UK small companies – 5%
Property fund – 5%

My thinking was maybe to split the fund and keep half in the multi asset fund and the other half split between the above funds. Combining these would give me the following allocations:

Global equities – 53%
UK equities – 14.8% (total equities approx. 68%).
Bonds – 24%
Property – 8.3%

Would appreciate anyone’s thoughts on this. Appreciate no one can tell me if the exact allocations are right but does this seem half sensible.


Thanks

Zorillo

I suppose it depends on the size of your pot. Mine is in SW Portfolio One, which is 100% equities, but then it's not large enough to cause me undue worry if it were to halve in value overnight. I'm also 35.

dunstonh

What higher risk multi-asset funds do they have? Usually it isnt just the one.

AnotherJoe

Waste of time hedging for the long term. Its like holding back the tide.

All you'll do is increase cost & thus decrease returns.

jamesd8221

They don't seem to have any alternative multi asset funds. I know other schemes have different funds depending on risk but I can't see L&G have anything other than switching to fairly specific funds.

I was unsure on the hedging part. The only reason for choosing this was to give some protection should the pound strengthen against the dollar in the longer term (apppreciate this also means I lose any upside if it weakens hence only hedging part of it).

si2winit

I’m 36 and 100% equities. It’ll be 20 years before I can retire and can ride out some sharp downturns.

I’ll probably move to a multi asset fund when I’m 45 to 50 as the pot becomes much larger.

I need to be aggressive to make my 800k goal though.

squirrelpie

The only reason for choosing this was to give some protection should the pound strengthen against the dollar in the longer term

Do you believe in fairies?


Personally, I would reduce the bond holding somehow. There's only one way the bond market is going to move now. But the same is also true of many equity markets, for different reasons.

jamesd8221

Thank you for the replies. Sounds like the general view is I should allocate some more to equities and forget about the hedged global/uk equity fund. I think they also have a UK tracker so I could add the UK tracker to the global one to get some UK exposure.

AnotherJoe

jamesd8221 wrote: »

They don't seem to have any alternative multi asset funds. I know other schemes have different funds depending on risk but I can't see L&G have anything other than switching to fairly specific funds.

I was unsure on the hedging part. The only reason for choosing this was to give some protection should the pound strengthen against the dollar in the longer term (apppreciate this also means I lose any upside if it weakens hence only hedging part of it).

You cannot hedge against the Pound changing in value over the next 20 years. If you wanted to hedge over 20 weeks yes. 20 years no. So you are pointlessly adding cost. If you only hedge part it's even worse since once will cancel out the other making it totally pointless.