Pension Allocation Options

Tom_Brine

I am reviewing my workplace pension as I said I would once a certain crietia/milestone was met and am after some advice.
My workplace pension is provided by Fidelity. My employer pays all fees bar each funds percentage management fee. I am 36 (37 next month) and currently contribute £2031.67 per month into the pension. This is a combination of employer contributions and my own salary sacrifce contributions.

Current Value £108,194.37 which is split between

Global Equity Passive £62,138.78  Fees 0.112% 5 Year Performance 9.6%
BlackRock Aquila MSCI World Fund S 2 43.9%
Black Rock Aquila Connect Currency Hedged MSCI World Index 43.3%
BlackRock emerging markets index fund 12.8%

Shariah £46,055.59 Fees 0.340% 5 Year Performance 17%
HSBC Islamic Global Equity Index 100%

I am now looking at other funds to invest in as both funds are clsoe to or above the £50,000 amount that I said I would lok to further diversify when hit. HOwever the only other option I would consider is the below

Global Equity Active Fees 0.709% 5 year performance 15.3%
Baillie Gifford Long Term Global Growth Investment Fund 37.7%
Ardevora Global Long-Only Equity Fund 31.9%
Pzena Global Expanded Value Fund 30.3%

My issue is the fees are double that of the Shariah Fund I am currently contributing into and the 5, 3 and 1 year perfromance are all below that funds perforance (1 year 16.9% compared to 20.6%). I am aware fo the advantages of diversification but also wary of starting to invest in a fund with double fees and less historic returns...... and i know it has no impact on future returns but no one can say what those are. Would I be better to continue in the Shariah fund which has proven to be a better, cheaper horse to back to date. I dont want to touch property as with the current situation I believe anyone with commercial property is in for a rough ride the next ten plus years with home working becoming far more normalised and large office space just not being needed. All of the other fund options have must worse returns in general due to a mix of equities and bonds, or a UK bias that im not interested in persuing with the time still to invest favouring higher risk equities.

Any advice appreciated

AnotherJoe

I have a lot of time for BG so I'd consider that (though thats not the BG fund i own so I'm not familiar with it but at quick glance its VERY similar to SMT which i do have, which is another BG run investment). And when i looked it up its 5 year performance it had more than doubled over the three years since it was created. So not sure where the 37% has come from? Is one of us looking at the wrong fund?

FWIW if you can move out of the currency hedged fund to a non hedged version i would do so, over 30 years trying to hedge against currency changes will be futile and costly. How do the two Aquila funds shape up against each other?

However other than that if you are happy with your current funds, I'd drop the arbitrary £50k limit, stay with them and let them run.

Though  Id be very tempted to add the BG fund as a way of holding SMT by proxy.

I agree with your reasoning about property, equity/bond mixes and UK bias and you having time to favour higher risk equities.

Tom_Brine

I too own SMT and have been contributing monthly into it Since November 2017, it was my first ever investment. Paid in £6450 to date and currently the holding is worth £12,797.93. It is held in a standard S&S account, was with Baillie Gifford direct then they shut down the facility, its now with HL with no fees for purchases for three years. I am continuing my monthly purchase until this time is up and then will look to move to a tax sheltered account by selling under the annual CGT limit each year then buying the same stock in an ISA.

The 37% is the proportion of the global equity active fund that is made up of the Baillie Gifford Fund. Apologies if i didnt make that clear. I can not change up the fund make up of each fund "bundle" I have access to. So The Global Equity Passive bundled fund has the Black Rock hedged currency fund taking up 43.3% of the contents. To remove the Hedged fund I woudl have to divest out of the global equity passive bundle and invest into something else. thoughthis may be a good idea, ill read up on currency hedging to inform myself more.

AnotherJoe

Ah I see i totally misunderstood. So you have to buy those "bundles" and cant buy individual funds? Or you can only buy some?