Stock Market impact on my DC Pension (now in negative growth)

CarMad

Hello Good People

I am 35, and have been contributing to a DC pension through my work since Nov 2015. I still have approx. 30 years until retirement. I decided to choose my investments myself instead of choosing the target date fund.
I am invested 100% in the Global Equity fund, and the current fund value as of today (26.10.18) is £21,085 showing -1.0% growth in the last 12 months.
My total actual contributions have been £20,489.

The growth back in Feb 2018 was around +18%.
The fund value at the start of October 2018 was showing approx. £22,900.
My monthly contributions including employers contribution is £460.

The fund fact sheet for the Global Equity fund shows "Underlying Fund Name: LGIM Global Equity Market Weights (30:70) Index 75% GBP Hedged"

Sector Allocation as at 30/06/2018
Financials 22.8%
Consumer Goods 12.4%
Industrials 12.4%
Consumer Services 11.4%
Technology 11.3%
Health Care 10.0%
Oil & Gas 8.5%
Basic Materials 5.4%
Other 2.9%
Utilities 2.9%

Geographical Allocation as at 30/06/2018
USA 39.0%
UK 30.1%
Other 11.4%
Japan 6.3%
China 2.6%
France 2.6%
Germany 2.3%
Canada 2.1%
Switzerland 1.9%
Australia 1.7%

Principal Holdings as at 30/06/2018
1 ROYAL DUTCH SHELL A 2.7%
2 HSBC HLDGS 1.8%
3 BP 1.4%
4 Microsoft Corp 1.2%
5 Amazon.Com 1.1%
6 Alphabet 1.1%
7 Apple Inc 1.1%
8 BATS 1.1%
9 GLAXOSMITHKLINE 0.9%
10 ASTRAZENECA 0.8%

I find the fact sheets for the Global Equity fund are out of date by several months, so would like to know if there is a website I can use to get more up to date on the performance of the Global Equity Fund?

I am thinking of reducing the % I have in the Global Equity fund to 50%, hold 10% in the cash fund, hold 20% in the Bond fund, and 20% in the SRI fund.

I'm aware the stock market has recently taken a hit, so hopefully the "Growth in the last 12 months" will start showing a + instead of a -

Thanks

CarMad

MK62

The markets go up and down all the time....just think of a dip in the market as your monthly contribution now buying more units.....

Nobody can say what the markets will do from here, and so nobody can tell you whether your move to de-risk your portfolio will have short term benefits or not.
Given your investment timeframe, it's likely to be a drag over the long term though (however, again, nobody can say for sure).

Your returns will have lagged a little since you started due to your fund being 75% GBP Hedged.....so the overseas (and hence non-GBP) 70% of the fund is 75% "hedged" to GBP, and so will only have captured c25% of the gain as GBP devalued 10-15% against the major currencies after the Brexit vote.
If GBP rises though, hedging can work in your favour, so it's a bit "swings and roundabouts".......what your fund does is remove a large part of the currency risk (and hence potential reward too) from investing in overseas assets.

The hedging itself has a bit of cost as well though.

AlanP_2

Why do you want to change your investment approach?

Your post heading implies the fact your investments are down is relevant but you go on to conclude that you know markets are down and hopefully minus will start being plus again.

You have a very long investment horizon, possibly 60 years if you drawdown against that pot in a long lived retirement. Understanding what you are trying to achieve and why will help you in the long run.

Personally with that timescale I would not be looking at cash and bond funds this early in the journey.

JoeCrystal

I am curious, CarMad. What was the default fund in your work pension and how the performance and cost compare considering that the default fund can only charge at the maximum of 0.75%?

Paul_Herring

With 30 years to go until retirement, you (you personally) actually want/need these dips so you get the opportunity to buy cheaply while the price is low, so that when the price goes back up (as it should over that time scale,) you end up with more money in your post, something that you wouldn't get if the price went inexorably up all the time.

And reducing any holdings while the price is down as you're planning to is only going to exacerbate any losses by crystallising them - the exact opposite of what you actually need - if anything you'd want to increase any holding in the stuff that's decreased, not reduce. But changing nothing is probably better until you can understand the reasons why what you want to do is completely contrary to what you need.

Nearer retirement, these sort of dips would be more of a concern, certainly, but by then you should have been changing where you're invested in so that such dips wouldn't materially affect you anyway to push you into to the sort of decision you want to make now anyway.

Thrugelmir

CarMad wrote: »

I decided to choose my investments myself instead of choosing the target date fund.

Why 100% in a single fund. Rather than a more diversified approach. You are going to experience wide gyrations in value. That's the risk of your approach.

Joey_Soap

Take no notice of anyone telling you to diversify from one fund. You have a global fund. Where could you diversify to? Mars? The moon?


It looks a solid investment to me and I urge you not to tinker with it. Try to gradually invest more monthly if you get a salary increase. Try not to look at it very often. You will do very well with a global fund like this, the major holdings are very sound. Stick at it. HTH.

System

Joey_Soap wrote: »

Take no notice of anyone telling you to diversify from one fund. You have a global fund. Where could you diversify to? Mars? The moon?


It looks a solid investment to me and I urge you not to tinker with it. Try to gradually invest more monthly if you get a salary increase. Try not to look at it very often. You will do very well with a global fund like this, the major holdings are very sound. Stick at it. HTH.

Agreed, except that it is a global fund that is very overweight (30%) in the UK!

CarMad

Thanks all for the replies.

Some food for thought in the above posts.

I have been invested in the global equity fund since I started contributing to it in Nov 2015, and so with the noise in the news about another crash I thought about changing strategy. At the moment I am trying to find out as much as I can before I make any sudden moves.

I will probably be leaving this employer in the next few months, so will probably not contribute any further unless I transfer it to another provider.

The default fund if I didn't self select was a target date fund, and not sure on the performance for a comparison. The charge for my current fund is 0.45%.

Main reason for a single fund was having an approx. 30 year window to see it grow, but I suppose I could have chosen the TDF.

I do also look at the online portal far too often, and I think I will limit it to maybe every 3 months.

Thrugelmir

Joey_Soap wrote: »

Take no notice of anyone telling you to diversify from one fund. You have a global fund. Where could you diversify to? Mars? The moon?

Property, gold, fixed interest, cash, renewable energy, private equity etc. Something that is uncorrelated perhaps. :wall::wall:

Joey_Soap

Economic wrote: »

Agreed, except that it is a global fund that is very overweight (30%) in the UK!

All those UK listed companies in the top ten have very little in the way of UK business now. All are global companies.