Shocked at how much my pension lost last year - should I change?

Dandytf

Maybe @Prism earlier reply could help as it points to u.k. Allocation being the non Global.

dunstonh

carpy said:

dunstonh said:

i suspect it has a similar underlying fund to yours, mine is the SW SSgA 50:50 Global Equity Index Pension (Series 2)

It hasn't underperformed relative to what it invests in.  That fund is effectively a tracker covering two areas (if you class global as an area).  If you look at one of the two areas, you will see why it has performed how it has. 

it's not just due to C19 it's been well below the fund sector average for a while now.

It is in the global equities sector despite not being a fully global fund.  So, it is no surprise it has not performed in line with the sector average.  It is not a fund to be in by choice. (that isn't hindsight talking.  It is the ratio that is the issue)

thanks for the advice.
if global = 1 area, what other 'area' is it in??

when you say it's not a fund to be in by choice....what do you mean exactly?  what is the problem with the ratio?
thank you

Its a 50% global tracker (excluding UK)  and 50% UK tracker within a single fund.     The UK makes up around 4% of global GDP.   So, a global tracker (including UK) would have around 4% allocated to UK.

UK large cap is a consistently poor performer relative to other similar countries.  The UK is much better in small and medium cap.   However, a general FTSE tracker will be weighted towards the large-cap.  So, the expectation is that a fund in the global sector with a high UK weighting would have underperformed similar funds with a low UK weighting.

Even in funds/portfolios with a home bias, you would not expect 50% of the equity content to be 50%.  Yet that is what this fund is doing.

carpy

dunstonh said:

carpy said:

dunstonh said:

i suspect it has a similar underlying fund to yours, mine is the SW SSgA 50:50 Global Equity Index Pension (Series 2)

It hasn't underperformed relative to what it invests in.  That fund is effectively a tracker covering two areas (if you class global as an area).  If you look at one of the two areas, you will see why it has performed how it has. 

it's not just due to C19 it's been well below the fund sector average for a while now.

It is in the global equities sector despite not being a fully global fund.  So, it is no surprise it has not performed in line with the sector average.  It is not a fund to be in by choice. (that isn't hindsight talking.  It is the ratio that is the issue)

thanks for the advice.
if global = 1 area, what other 'area' is it in??

when you say it's not a fund to be in by choice....what do you mean exactly?  what is the problem with the ratio?
thank you

Its a 50% global tracker (excluding UK)  and 50% UK tracker within a single fund.     The UK makes up around 4% of global GDP.   So, a global tracker (including UK) would have around 4% allocated to UK.

UK large cap is a consistently poor performer relative to other similar countries.  The UK is much better in small and medium cap.   However, a general FTSE tracker will be weighted towards the large-cap.  So, the expectation is that a fund in the global sector with a high UK weighting would have underperformed similar funds with a low UK weighting.

Even in funds/portfolios with a home bias, you would not expect 50% of the equity content to be 50%.  Yet that is what this fund is doing.

thank you for that,i have a good understanding now.
so what maximum exposure to the UK would you recommend? 10%?
presumably (from what you've said) a fund/tracker in the FTSE250 or other smaller index would be preferable to the FTSE100 then?

[Deleted User]

There is no such thing as “consistently” in the markets. Large caps have periods of under- and-over performance vs small caps. These periods can be quite long. FTSE 100 struggled for ~20 years but that does not tell us a thing about the next 20 years.  If anything, mean reversal is more likely.  There have also been periods of UK large cap stocks outperformance. 

Having said this, historically “small” has been a factor worldwide, although you are getting a bit more return for taking on more risk. And questions are being raised whether this factor will keep its advantages going forward - certainly hasnt been the case in the US over the last little while. 

In general, you dont want to be anywhere near 50% in any particular market. Home bias makes sense but not to this extent. You want to diversify. This paper explains and provides some guidance on allocations that max potential returns for a given risk level https://www.vanguardcanada.ca/documents/home-bias-allocation.pdf

fluffyfrog

I need to find out what I was earning a few years before 2006 as I want to take some of my pension. However they need this information to see if I can claim more than 25% tax free. Can HMRC provide this for me

JoeCrystal

fluffyfrog said:

I need to find out what I was earning a few years before 2006 as I want to take some of my pension. However they need this information to see if I can claim more than 25% tax free. Can HMRC provide this for me

Surely you should have your own paperwork/records & payslips???

TenukiVerucca

I received the paperwork from Scottish Widows today telling me how much they'd lost of my already tiny pension. I am quite annoyed as a result.

Is there a better fund to move into with them?

[Deleted User]

Step number 1: select an appropriate risk level
2. Select asset allocation between stocks and bonds to reflect 1.
3. Write up investment policy statement
4. Select bond duration and type  to reflect your IPS
5. Select country allocation for the equity portion
6. Decide if you want to emphasize certain factors, such as quality or size
7. Select an appropriate and cost efficient investment vehicle (s)

You cant start with 7. 

dunstonh

TenukiVerucca said:

I received the paperwork from Scottish Widows today telling me how much they'd lost of my already tiny pension. I am quite annoyed as a result.

Is there a better fund to move into with them?

Have you read any of the posts on this thread before asking that?

TenukiVerucca

dunstonh said:

TenukiVerucca said:

I received the paperwork from Scottish Widows today telling me how much they'd lost of my already tiny pension. I am quite annoyed as a result.

Is there a better fund to move into with them?

Have you read any of the posts on this thread before asking that?

Yes, but I am absolutely clueless as to how pensions work or the best approach to take and a brief look at my account on SW website doesn't indicate whether its possible to move it within the company to a better fund. 

Thank you for your advice!