Assistance with improving my pension fund choices

csgohan4

Your overthinking too much. If you read the speculative thread, you might have a heart attack. 

Read up, get an investment strategy that suits your risk appetite and stick to it. Otherwise 100% passive investment and use a dump and forget fund, a cheap index tracker would be reasonable for now, keep it simple for now and think of satellite funds when your more experienced and more comfortable with other types of funds.

Sometimes too much choice is bad for a starter investor. I was overwhelmed as well when I first started out. So many funds, IT's  and ETF's to choose one. Tempting to base your investments on past performance but as Woodford can attest, it may not work out for you. 

No-one has an edge, unless your Warren buffet/ Bowelhead, passive investing you won't go wrong for the starter investor

Prism

danlightbulb said:

I was thinking about making the first significant change today - moving 30% from the existing fund to the new fund to get the mix broadly in the right place as discussed above.

Then I looked again at the current performance of the two funds and read some articles. Am I too late to this party? There are strong suggestions that US equities are overvalued at the moment and UK is possibly undervalued (although this isn't so clear).

We've seen massive growth in the US equity funds over the past ten years. If my mix had been right ten years ago, I'd have benefited but is now the right time to be making the change? I know that things can go either way but when indicators are suggesting I could be moving funds at a significant peak, this is a big risk isn't it? But then so is staying where I am now.

I agree with everything said so far in the thread, but the problem is Im now already invested in a fund and moving (even if for the right reasons) could go wrong.

This is where opinion kicks in again. Some would say that the US is more expensive than the UK because those US companies are expected to increase their profits at a greater rate than UK companies. A few big companies can move the markets so usually when people are referring expensive US stocks they are talking about the big tech companies.

So the question is will the big US tech companies continue to grow at a much faster rate than the UK oil companies and banks, or at least enough to justify the increased price? I have no idea but the markets in their mass wisdom have currently decided yes. Anyone who argues one way or the other usually has something to gain or lose from their argument i.e. someone who suggests that the US is expensive probably has a lower allocation to the US and therefore wants to be correct.

So for lack of anyone really having a clue, and partly because people have been saying this for over 5 years now, I would suggest do what feels right. Sorry if thats not much help

Thrugelmir

Prism said:

danlightbulb said:

I was thinking about making the first significant change today - moving 30% from the existing fund to the new fund to get the mix broadly in the right place as discussed above.

Then I looked again at the current performance of the two funds and read some articles. Am I too late to this party? There are strong suggestions that US equities are overvalued at the moment and UK is possibly undervalued (although this isn't so clear).

We've seen massive growth in the US equity funds over the past ten years. If my mix had been right ten years ago, I'd have benefited but is now the right time to be making the change? I know that things can go either way but when indicators are suggesting I could be moving funds at a significant peak, this is a big risk isn't it? But then so is staying where I am now.

I agree with everything said so far in the thread, but the problem is Im now already invested in a fund and moving (even if for the right reasons) could go wrong.

So the question is will the big US tech companies continue to grow at a much faster rate than the UK oil companies and banks,

AstraZeneca is now the largest stock on the LSE. 

Albermarle

There are strong suggestions that US equities are overvalued at the moment and UK is possibly undervalued (although this isn't so clear).

It maybe correct and it may not be . It is just opinion and you can just as easily find the opposite opinion.

We've seen massive growth in the US equity funds over the past ten years. If my mix had been right ten years ago, I'd have benefited but is now the right time to be making the change? 

You are correct that being underweight in the US that you have 'lost out' but hindsight is a wonderful thing.

Nobody can tell you if this is the right time to change as nobody knows.

I know that things can go either way but when indicators are suggesting I could be moving funds at a significant peak, this is a big risk isn't it? But then so is staying where I am now.

Just move 50% then . Probably better than doing nothing . I think you might be suffering from this condition .

https://www.investopedia.com/terms/a/analysisparalysis.asp

danlightbulb

@csgohan4
Im trying not to make a judgement call but it's hard - there is a lot of money at stake. Whilst I'm a starter investor in terms of knowledge and experience, it's by no means a starter fund that I currently have invested.

I've done alot of reading and research the past few days and whilst in principle it seems the right thing to do to reduce my UK equities to a less overweighted position, I'm concerned about making the change now when the gap is so large because it looks like a bubble? If the funds were currently performing similarly, like they were 10 years ago before they started to diverge, then making the change would have been less risky I think? But I know that's useless because I can only do what I can do now, can't change the past.

Prism

danlightbulb said:

@csgohan4
Im trying not to make a judgement call but it's hard - there is a lot of money at stake. Whilst I'm a starter investor in terms of knowledge and experience, it's by no means a starter fund that I currently have invested.

I've done alot of reading and research the past few days and whilst in principle it seems the right thing to do to reduce my UK equities to a less overweighted position, I'm concerned about making the change now when the gap is so large because it looks like a bubble? If the funds were currently performing similarly, like they were 10 years ago before they started to diverge, then making the change would have been less risky I think? But I know that's useless because I can only do what I can do now, can't change the past.

There is often a lot of money involved. You could be sat looking at your allocation in 10 years time with 4x the current amount thinking 'I wonder if the UK or US is over priced'. It just feels more important because you are considering a fund switch. I did a pension transfer the other year of a few hundred thousand. It arrived in cash. A few days earlier it was all invested but it was quite difficult to hit the buy button to get it invested again even though nothing really had changed in the meantime. 

csgohan4

danlightbulb said:

@csgohan4
Im trying not to make a judgement call but it's hard - there is a lot of money at stake. Whilst I'm a starter investor in terms of knowledge and experience, it's by no means a starter fund that I currently have invested.

I've done alot of reading and research the past few days and whilst in principle it seems the right thing to do to reduce my UK equities to a less overweighted position, I'm concerned about making the change now when the gap is so large because it looks like a bubble? If the funds were currently performing similarly, like they were 10 years ago before they started to diverge, then making the change would have been less risky I think? But I know that's useless because I can only do what I can do now, can't change the past.

Do you have an edge over seasoned investors on wall street? How long are you going to wait while your own fund is underperforming. All choices which you will have to make.

Hindsight is a wonderful thing, I would have invested in tesla/Apple 10 years ago and I would have made a boat load by now. 

Remember your investing for the long term, so you will naturally ride out the bad with the good. 

Prism

Thrugelmir said:

Prism said:

danlightbulb said:

I was thinking about making the first significant change today - moving 30% from the existing fund to the new fund to get the mix broadly in the right place as discussed above.

Then I looked again at the current performance of the two funds and read some articles. Am I too late to this party? There are strong suggestions that US equities are overvalued at the moment and UK is possibly undervalued (although this isn't so clear).

We've seen massive growth in the US equity funds over the past ten years. If my mix had been right ten years ago, I'd have benefited but is now the right time to be making the change? I know that things can go either way but when indicators are suggesting I could be moving funds at a significant peak, this is a big risk isn't it? But then so is staying where I am now.

I agree with everything said so far in the thread, but the problem is Im now already invested in a fund and moving (even if for the right reasons) could go wrong.

So the question is will the big US tech companies continue to grow at a much faster rate than the UK oil companies and banks,

AstraZeneca is now the largest stock on the LSE. 

Yes fair enough. I was being a bit too simplistic to highlight my point. I actually quite like the new look FTSE 100 now that the banks and oil companies have taken a tumble. Its actually quite balanced except for the missing tech. My UK allocation is doing quite nicely for the year - up about 6% so far.

itwasntme001

Prism said:

danlightbulb said:

I was thinking about making the first significant change today - moving 30% from the existing fund to the new fund to get the mix broadly in the right place as discussed above.

Then I looked again at the current performance of the two funds and read some articles. Am I too late to this party? There are strong suggestions that US equities are overvalued at the moment and UK is possibly undervalued (although this isn't so clear).

We've seen massive growth in the US equity funds over the past ten years. If my mix had been right ten years ago, I'd have benefited but is now the right time to be making the change? I know that things can go either way but when indicators are suggesting I could be moving funds at a significant peak, this is a big risk isn't it? But then so is staying where I am now.

I agree with everything said so far in the thread, but the problem is Im now already invested in a fund and moving (even if for the right reasons) could go wrong.

This is where opinion kicks in again. Some would say that the US is more expensive than the UK because those US companies are expected to increase their profits at a greater rate than UK companies. A few big companies can move the markets so usually when people are referring expensive US stocks they are talking about the big tech companies.

So the question is will the big US tech companies continue to grow at a much faster rate than the UK oil companies and banks, or at least enough to justify the increased price? I have no idea but the markets in their mass wisdom have currently decided yes. Anyone who argues one way or the other usually has something to gain or lose from their argument i.e. someone who suggests that the US is expensive probably has a lower allocation to the US and therefore wants to be correct.

So for lack of anyone really having a clue, and partly because people have been saying this for over 5 years now, I would suggest do what feels right. Sorry if thats not much help

Much of the outperformance is not only driven by the high growth rates of these big US tech firms but by which economic regime we are currently under.  Disinflationary conditions where low interest rates are a persistent symptom are very favourable for cash flows going out well into the future, as it provides a big boost to the valuation of these firms.  I imagine if the regime shifted to a more reflationary or inflationary regime, you would expect the companies in the FTSE100 geared to thrive under these conditions to outperform the US tech names.  The quality growth model of investing will have an expiration date, as has and will all styles of investing.

This is what makes investing so difficult and makes "timing the market" so appealing.  Not that I am advocating timing the market of course.

I am heavily invested in the growth/quality/tech names so I very much prefer the current conditions to remain for a whilst yet.

Albermarle

 I did a pension transfer the other year of a few hundred thousand. It arrived in cash. A few days earlier it was all invested but it was quite difficult to hit the buy button to get it invested again even though nothing really had changed in the meantime. 
Similar experience , shows we are all human/imperfect/sometimes irrational I suppose .