Estimating pension pot - fund performance

[Deleted User]

Sunnylifeover50plan wrote: »

I'm invested in two funds since June 17 £500k equally split into 2 funds, current value is around £553k, I haven't paid any funds into the plans over this time and SIPP/ IFA annual fees are around £2k pa. So far I've only paid £1250 IFA fees from the BMI fund to cover this year. Prior to this non fund fees were taken from a cash balance held in the SIPP;

Prudential absolute return - which seems to appreciate by about 5% pa after fund fees.
BMI (Blackstone Moregate) Fidelity passively managed fund - which grew by about 0% (up and down) over the first 18 months and around 8.5% this year.

Personally whilst happy with the Pru the BMI fidelity one has proved a disappointed but so far I've stuck with it given there hasn't been a lot of good news over the last 2.5 years.

Both are viewed as medium risk - don't know if this helps the OP.

1. The IFA fees you quote seem too low vs what they normally charge. Are you sure?
2. The return numbers you quote are kinda meaningless. To be meaningful you need to compare to a benchmark and to do that over a decent period of time.

[Deleted User]

In general, a 30 year old ought to focus on his career, growing income and putting the money away rather than trying to guess what the future value of his pension fund might be.

[Deleted User]

Sunnylifeover50plan wrote: »

1/ am I sure what I pay my IFA per annum? answer is yes £1250 - no idea if that's low or high. He doesn't do much apart from an annual review with me and answer a few questions.
2/ what's the benchmark gain for a medium risk mixed passive fund pa these days?

If you go to the appropriate Morning Star page for the fund, it will provide a plot illustrating performance vs the benchmark and similar class of funds.

Here is an example https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000MLUQ

ffacoffipawb

Bezzer65 wrote: »

I'd much rather have the pessimistic projections than the pie in the sky ones from the late 80's


- Poor (8%)
- Average (12%)
- Good (16%)


Maybe the above is a little silly but when I signed up for a Private Pension and an Endowment policy, there were some seriously silly figures being banded about.

The rates were 8.50%, 10.75% and 13.00% in the late 1980's.

These were nominal returns.

The rates quoted in the OP are real returns, adjusted for inflation.

bostonerimus

ffacoffipawb wrote: »

The rates were 8.50%, 10.75% and 13.00% in the late 1980's.

These were nominal returns.

The rates quoted in the OP are real returns, adjusted for inflation.

I started investing in the late 80s and my 30 year average annual return is 8.6%. That's included a couple of crashes and many corrections.

What simple projections fail to capture is sequence of return risk. So I'd use the efficient frontier to select asset allocation, historical data to come up with the statistics (except the expected return) and maybe today's PE values and 10 year Treasuries/Gilts for the returns.

AnotherJoe

Bezzer65 wrote: »

I'd much rather have the pessimistic projections than the pie in the sky ones from the late 80's
- Poor (8%)
- Average (12%)
- Good (16%)
Maybe the above is a little silly but when I signed up for a Private Pension and an Endowment policy, there were some seriously silly figures being banded about.

The problem with overly pessimistic is it can encourage some to say "well that's rubbish I can get more than that on BTL or in a S&S ISA " or even "not worth the effort" and so have a counter productive effect

sandsy

pledgeX wrote: »

The pensions is one of those standard group workplace multi-asset lifestyle pensions with decreasing risk levels as you approach retirement.

Do you have any option to pick less conservative funds? Those rates are below what I'd expect, even given the conservative nature of the projection rates and the inflation assumption normally used? They're pretty shocking!

Prism

bostonerimus wrote: »

I started investing in the late 80s and my 30 year average annual return is 8.6%. That's included a couple of crashes and many corrections.

Is that after inflation or simply the actual return. Assuming its the return I reckon I am about 1% per year behind you, mostly due to starting at a different time and not paying attention to opaque fund charges of the era.

What simple projections fail to capture is sequence of return risk. So I'd use the efficient frontier to select asset allocation, historical data to come up with the statistics (except the expected return) and maybe today's PE values and 10 year Treasuries/Gilts for the returns.

I like to use efficient frontiers to help plan my allocation. Not only equities/bonds but also equity break down between large/small/em (which I know you don't do)

bostonerimus

Prism wrote: »

Is that after inflation or simply the actual return. Assuming its the return I reckon I am about 1% per year behind you, mostly due to starting at a different time and not paying attention to opaque fund charges of the era.

It's just the return, no inflation adjustment.

[Deleted User]

bostonerimus wrote: »

It's just the return, no inflation adjustment.

How is it calculated? By the provider? Is it money weighted or time weighted?

When people compare “returns” they are often comparing apples and oranges