VLS 100 SIPP UK Weighting question

contact_the_owl

Hi there,


well this is my first ever post here as a newbi but have a coupld of SIPP Questions i would appreciate peoples opinions on please.


I have recently consolodated all of my pension from pervious employer into Interactive Investor. Curently recieved funds of 145K (with an addition 85K on its way in the next few days)


Im 45 (aiming to retire probably about 67 ish)


I have invested the 145K in the VLS100 fund with a view to revieiw in 10 years or so and probaly enter VLS80 or VLD60 or something similar


Now i know the VLS100 has ~25% UK weighting (im planning to retire in the UK) however im guessing they will be larger FTSE100 companies who are probably more global and make profits in $ rather than £


My question is with the remaing 85K i have comming in should i be looking to go more into say FTSE250 or FTSE 350 companies as they will be making profits in £ and less suseptable to exchange rate flux or just stick it into a VLS fund and think about this later.


I specifically choose VLS as i wanted a "fire and forget" type of Fund as time (and knowladge does not permit me to spend building up my own portfolio)


Maybe im overthinking this too much just would welcome others opinions on this.

Johnnyboy11

You could buy some of this fund to reduce your UK exposure inherent in the VLS funds: Vanguard FTSE Developed World ex-UK Equity Index Accumulation (GBP)
That's what I've done.

contact_the_owl

thanks Johnnyboy, well i was actually thinkinging the reverse should i have more real UK (by real i mean Excluding the FTSE100 as this tend to be full of global players?) exposure since retirement is going to be in the UK

dunstonh

I specifically choose VLS as i wanted a "fire and forget" type of Fund as time (and knowladge does not permit me to spend building up my own portfolio)

Yet you are looking to break the asset allocation with your own management decisions.

Perhaps you need to rethink how you invest. Maybe VLS100 is not suitable for you?

contact_the_owl

well im not saying that it is definatly the right fund hence the questions for some advice regarding the UK

dunstonh

contact_the_owl wrote: »

well im not saying that it is definatly the right fund hence the questions for some advice regarding the UK

So, why not change it to a global tracker inc UK or alternative multi-asset fund with 100% equity exposure with an asset mix you like?

Adding in multiple funds means you are going to lose your invest and forget requirement.

contact_the_owl

well thats kind of the situation i find myself in would like a multi asset fund that would have or contain an assed mix of UK smaller companies as a percentage of the fun (however most multi funds that i can find seem to have UK mix thats predomently FTSE100 orientated) which in my option (and i may be completly wrong here??) dont represent true UK companies trading in £'s and are suseptable to currency shifts


although i may have got the wrong end of this stick on this and quite happy to be proved wrong!

AlanP_2

The main passive multi-asset offerings like VLS or HSBC Global focus on larger companies from across the globe not just the UK.

If you look at the underlying funds in VLS https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-100-equity-fund-accumulation-shares/portfolio-data you will see that the main UK allocation goes to FTSE All Share so it is wider than just the FTSE 100 but given the weighting of FTSE 100 companies, and the big players in the FTSE 100, it still means you are heavily invested in those.

If you want a true "small company" UK allocation then you will need to add a Smaller Companies fund of some kind. This would increase your overall UK allocation though and will probably be at a higher fund charge.

One of the downsides of tracker funds is that they follow the weightings of the companies in the selected index hence larger companies get more of the investment. Going away from "fire & forget" tracker options means you have to decide on your asset allocations and build your own portfolio.

AnotherJoe

It's a mistake to think you should invest in the UK just because you will retire here. If your money is invested globally then things level out. Eg world economy does well so do you world economy does bad well it's unlikely uk will do well by itself and if uk economy does very well then it's very likely so is global. Or if uk does badly global may still be good.
By having a wide global spread you hedge your bets.
I personally would invest in something more global than VLS to avoid the over concentration in a handful of sectors you get with ftse 100

Linton

I agree with the gist of the other posts.

If you want to invest in equity globally without getting involved in the details and then leave it to do whatever it does, go for a global tracker. Of all the ones available I would prefer Vanguard FTSE Global All-Cap Index because it is a pure tracker with no UK bias and has the broadest coverage available as it includes moderately small companies.

If you particularly like VLS100's allocation buy that.

If you want to get involved in the details and want to diy you need to define your desired allocation and work out a set of funds that working together provide it. £145K is at a size where diy becomes practicable and potentially worthwhile, but only do it if you are really interested. The problem with just adding extras to a general fund is that you mess up the allocation that the fund manager has decided is optimal for his fund and you tend to cause unbalance elsewhere.

On UK allocation in general, as you point out the large globally trading UK companies are effectively priced in $s. So a FTSE100 dominated UK holding does not give you currency diversification against your other global holdings. The downside of the FTSE100 as a global surrogate is that the set of industries in the index are rather limited - no major tech companies, no major vehicle, electronics, or consumer goods manufacturers etc etc.

Tom99

I use HSBC's FTSE250 tracker to water down the allocation to the top FTSE100 companies.