SIPP - which fund to sell to replenish cash?

atush

johnsmith1890 wrote: »

My cash fund is almost empty so I need to look at selling some fund units to replenish it. I have eight funds and all bar one are currently below their original value. A couple, which are mainly comprised of bonds, are just below - they haven't fluctuated in value much recently, so I will leave them alone, probably. In general terms, would you incline to sell units of the fund that is in profit, or units of the worst fund - currently a FTSE 100 tracker down 10% at the moment - or something else, maybe bits of more than one fund? Thanks.

What are you doing ith the income from your pension? Are you reinvesting or in acc funds? If you are receiving income, stop reinvesting it and the cash pot will replenish itself?

What does your portfolio yield?

[Deleted User]

atush wrote: »

What are you doing ith the income from your pension? Are you reinvesting or in acc funds? If you are receiving income, stop reinvesting it and the cash pot will replenish itself?

What does your portfolio yield?

Eight funds - five are Acc, three are Inc. Over the time I've had the SIPP, which is now 12 months, the three Inc funds have yielded 1.3% of the original pot value. The income goes into the cash bucket, from which I withdraw my monthly salary.


At the moment it's difficult for me to determine the performance of the Acc funds in terms of dividends, as a result of the convoluted reporting noted in my last post. Of the five Acc funds, one of them, Fundsmith, is 8% up, the others are down. The worst performer at the moment is Quilter Small Companies, down about 16% (40k originally invested, now worth about 35k). I purchased some of the funds over a period of a few months following setting up the SIPP, so some of them have not yet been ex dividend.

Alexland

Give serious consideration to rationalising down to one or two funds per account. Anyone can complexify but the skill is keeping things simple.

Alex

Thrugelmir

If you wish to maintain the current number of funds. Then I'd just slice something off the top of all of them. Relative performance in such a short period of time in voltile markets has no real bearing.

Longer term I'd look at rationalising them. Then rethink the overall strategy. Investing is so so easy in a rising bull market (fuelled by accomodative Central Bank policies). As even bad investments can make a modest return. Now the taps are turned off. Markets will return to their more normal volatile state.

AnotherJoe

I'd sell the FTSE100 tracker as that's a poor choice.

Thrugelmir

AnotherJoe wrote: »

I'd sell the FTSE100 tracker as that's a poor choice.

Could be the next stellar performer. Investors are like buffalo. Move in herds. Attracted by the latest fad. Fads lose momentum though as once everyone is on the same bandwagon. As there's no value to be found. Being patient and contarian does have it's advantages. If there's no immediate requirement to liquidate a particular holding.

[Deleted User]

Thanks guys for your thoughts. Mulling over the various possibilities, I'd be a bit nervous with just two funds. At least one, probably both, would have to be low/very low risk. At the moment I've got quite a good spread, with the FTSE Tracker, Vanguard Life, CS High Income, Asia shares, US shares, Small Co.s, Fundsmith and RL Bonds. But, I know it is a common school of thought to have just a few funds. Maybe I do need to drop from eight; I'll keep it under review. I'm tending towards selling a chunk of the only fund that's currently in profit - Fundsmith, but a few of the funds are close to breaking even (the US shares was even in positive territory a few days ago), so I might just sell bits of those funds.


On the subject of Acc funds, does anyone know how dividend payments are normally represented in the fund holdings?

AnotherJoe

johnsmith1890 wrote: »

Thanks guys for your thoughts. Mulling over the various possibilities, I'd be a bit nervous with just two funds. At least one, probably both, would have to be low/very low risk. At the moment I've got quite a good spread, with the FTSE Tracker, Vanguard Life, CS High Income, Asia shares, US shares, Small Co.s, Fundsmith and RL Bonds. But, I know it is a common school of thought to have just a few funds. Maybe I do need to drop from eight; I'll keep it under review. I'm tending towards selling a chunk of the only fund that's currently in profit - Fundsmith, but a few of the funds are close to breaking even (the US shares was even in positive territory a few days ago), so I might just sell bits of those funds.

Whether or not funds have broken even should be an irrelevance as to which to sell unless CGT comes into it which i dont believe it does for you?.
Either you should sell in order to re-establish the allocations you decided were optimum, or you should sell funds you think will do badly in future or you decide you screwed up with allocations, or conditions changed and so will sell/buy to establish new allocations.

In none of those 3 scenarios should the fact that one fund is in profit and another is in loss, be a factor.


Otherwise you end up keeping Dog Fund and selling Awesome Future fund, just to avoid the scary prospect of "losing money" on Dog Fund, whereas the reality is, you already lost money on it and selling it is just a paper exercise confirming the reality.


p.s. most likely Vanguard Life overlaps significantly with FTSE Tracker*, Fundsmith, Asia shares, US shares, and RL Bonds. Leaving only small cos giving you more spread.
Theres a website, i forget which, which will dig into your funds and tell you how much they overlap but if you cant find it just look at the top 20 from each of those funds and see what you find.


* terrible idea to track this index.

barnstar2077

John, I am not retired yet so my goal is for pure growth over the long term. I agree with AnotherJoe that your funds overlap a lot reducing your spread, I have gone for low cost trackers, they are UK index, European, international (mainly US) and emerging markets (China, India etc.) With the European and International funds making up sixty percent of my investment between them, and twenty percent each for the other two. It is the simplest, cheapest, global spread I could work out how to make : )

You could really do with a thread / book advice about how to construct your portfolio when in retirement (I would be pretty interested myself.) Can anyone suggest any?

Alexland

johnsmith1890 wrote: »

Thanks guys for your thoughts. Mulling over the various possibilities, I'd be a bit nervous with just two funds.

I would agree with you if the one or two funds you chose to keep were highly concentrated into a certain style (such as Fundsmith) or geographic index. Have you considered a multi asset fund or maybe a 2 fund portfolio of broad global equities and bonds?

Alex