Looking to review holdings

Linton

fjh wrote: »

Thank you for replies and thoughts.
Anything you would look at from my holdings to move Out of ? If yes , why ?
Thanks

I would:
- Definitely keep the Prufunds, and VLS40 as they are doing their job well
- Probably keep Jupiter Merlin Income as it may provide a bit of diversification
- Get rid of BMO MM Navigator as its lower performance is not sufficiently matched by lower volatility - see "Sharpe Ratio".
- Get rid of Cirilium Balanced as it is too close to the better performing Threadneedle equity and bond.
- rebalance back to the current high level split.

[Deleted User]

fjh wrote: »

The holdings all put together by IFA
My risk remains low but I have been disappointed with Pru against ‘promise’ of around 6% growth by IFA the other one I am unsure On is the BMO Navigator.
Ideally would like to arrange holdings so don’t need to pay .5% ongoing , been invested since July 18 and charges have had significant impact on me.

Did IFA explain his logic of mixing these overlapping funds in strange proportions? What asset allocation was he targeting? Why do you need an income fund given that you are not retired?

In general, future returns are unknown and it’s ok to have less than 6% return if there is a reason. Fund performance should be compared against an appropriate benchmark. I would be very concerned with an IFA saying that a particular vehicle “promises” to return 6%.

Over the last 10 years both stocks and bonds performed very well. Furthermore, sterling had a massive drop over that period which would make your sterling denominated assets look better than they really did.

And yes, 0.5% ongoing costs, while could be worse, are still high given what’s available on the market.

I would take a little time to read books on risk and asset allocation. Then select asset allocation. Finally pick an appropriate product which minimizes costs and maximizes simplicity.

P.S. when you say 0.5% ongoing, do you mean IFA charges on top of already expensive funds? Looking at the hotchpotch picked by this IFA, I’d say 0.5% is waste. Also, “growth” figures over a period of a few months are not in any way meaningful.

Linton

fjh wrote: »

Thank you .
I would be pleased if I could draw 3% pa which I hope is attainable .

3% of original pot drawdown inflation adjusted with that portfolio seems reasonable to me.

Linton

fjh wrote: »

The holdings all put together by IFA
My risk remains low but I have been disappointed with Pru against ‘promise’ of around 6% growth by IFA the other one I am unsure On is the BMO Navigator.
Ideally would like to arrange holdings so don’t need to pay .5% ongoing , been invested since July 18 and charges have had significant impact on me.

The Pru Growth fund has been achieving over 6% for almost every one of the past 10 years. In the past 12 months it was 6.2%. The past year or so has been particularly difficult for investors thanks to Trump and China. Your 3 months experience means nothing.

[Deleted User]

Promising rate of growth based on a period of the longest ever bull market starting in 2009 is NOT good advice. Just like the prior (disastrous) decades’ performance isn’t representative of long term returns, basing future projections on the last decade is both misleading and incompetent for an IFA.

Also, without studying the details, it looks like Pru is doing something funny with returns, perhaps underreporting for high growth years and then overreporting for low years to give a perception of smooth growth. Hence supposed outperformance last year is fake.

https://www.morningstar.co.uk/uk/snapshot/snapshot.aspx?id=VAUSA06TIL&tab=1&InvestmentType=SA

[Deleted User]

There you go. “Smoothing” returns is exactly what Pru is doing. Last year’s “outperformance” is an artifact of this approach, not a real growth in the underlying assets you own.

In fact the fund performed in line with the benchmark during the bull market and has never been tested in a bear market. Predictions of future returns of this nature are BS, financial pornography.

It’s a marketing ploy. Also, a peculiar way of shifting cash between different groups of investors. Some win. Others ... not so much https://citywire.co.uk/new-model-adviser/news/pension-transfers-drive-prufunds-popularity-but-are-ifas-overly-reliant/a1082102

Linton

Deleted_User wrote: »

Promising rate of growth based on a period of the longest ever bull market starting in 2009 is NOT good advice. Just like the prior (disastrous) decades’ performance isn’t representative of long term returns, basing future projections on the last decade is both misleading and incompetent for an IFA.

Also, without studying the details, it looks like Pru is doing something funny with returns, perhaps underreporting for high growth years and then overreporting for low years to give a perception of smooth growth. Hence supposed outperformance last year is fake.

https://www.morningstar.co.uk/uk/snapshot/snapshot.aspx?id=VAUSA06TIL&tab=1&InvestmentType=SA

The Prufund is a With Profits fund which means that it is run with the objective of delivering a specific return. It will hold money back during good years and release it during bad. Over the 2008/2009 crash With Profits funds barely twitched.


So for the very cautious investor it is an excellent solution avoiding nervous breakdown caused by 20+% falls whilst still gaining from the long term benefits of equity investing. For example over the past 10 years the OPs Prufund has achieved about 3 times the return of a typical gilt fund. Looking at the figures for VLS40 since start-up, the Prufund has marginally outperformed it with much less volatility.

[Deleted User]

Linton wrote: »

The Prufund is a With Profits fund which means that it is run with the objective of delivering a specific return. It will hold money back during good years and release it during bad. Over the 2008/2009 crash With Profits funds barely twitched.


So for the very cautious investor it is an excellent solution avoiding nervous breakdown caused by 20+% falls whilst still gaining from the long term benefits of equity investing. For example over the past 10 years the OPs Prufund has achieved about 3 times the return of a typical gilt fund. Looking at the figures for VLS40 since start-up, the Prufund has marginally outperformed it with much less volatility.

The fund was established in November 2008. Market peaked a year earlier and was close to the lowest point when the Pru fund was launched. The largest single day drop happened in October 2008. It reached the bottom in March 2009 and has been trending up ever since. That’s why the Pru fund only “twitched”. Someone born in 1945 can’t claim to have suffered during WW2.

The timing of funds launch was lucky. It never experienced a bear market. While the approach will provide delay or a “lag”, the value of the fund will drop by the same amount as the rest of the stockmarket in a bear market.

Investors who are sold this fund on the pretext of the “with profits” concept will be severely disappointed. It’s a marketing ploy.

P.S. there is nothing “cautious” about the fund asset make-up. Can’t be compared to VLS 40, which really is a conservative fund.

fjh

SonOf wrote: »

The cirillium funds are not ones that are typically used by IFAs. They are designed to be used by agents of the Intrinsic network of FAs. Most, if not all IFAs would not go near them. Are some or all of these held on the Old Mutual Wealth platform by any chance (Intrinsic, Cirrilium and OMW platform are all part of the same group - All of those funds held are on the Instrinic restricted panel).

Thanks- no all held on the Prudential platform.

fjh

Linton wrote: »

I would:
- Definitely keep the Prufunds, and VLS40 as they are doing their job well
- Probably keep Jupiter Merlin Income as it may provide a bit of diversification
- Get rid of BMO MM Navigator as its lower performance is not sufficiently matched by lower volatility - see "Sharpe Ratio".
- Get rid of Cirilium Balanced as it is too close to the better performing Threadneedle equity and bond.
- rebalance back to the current high level split.

Very helpful- thank you , I had thought of both those holdings purely from a performance aspect not from a ‘balance’.