Assistance with improving my pension fund choices

danlightbulb

If a geographical split is representative, why don't funds put more in China? China and Hong Kong has 15% of the global market cap from what I can see?

Prism said:

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.

How is your UK fund up for the year, whereas mine is down? The global component (50%) of my 50/50 fund must be up, because all the other global ex-UK funds are up, so for my whole fund to be down it must be being dragged back by the UK component. Yet yours is up? Wouldn't they be investing in broadly the same companies?
*edit - or do you mean the current financial year is up? If so, yes I can see that but that's only because it dipped so badly in March?

itwasntme001

I should add that there is a pretty strong relationship between some of the growth names and the disinflationary conditions we find ourselves in today as many of these names further exacerbate disinflation (e.g. Amazon lowering margins it makes in retail, outsourcing IT services to lower cost AWS) which in turn help lower interest rates, boosting valuations making the names even stronger to deploy more capital back into its businesses.  Self reinforcing feedback loop.

Sailtheworld

danlightbulb said:

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.

You sort of think you're over exposed to the UK but not quite sure it's a good idea to reduce it. Worth remembering doing nothing is still an option. If nothing's really broken then why look for a fix?

danlightbulb

Sailtheworld said:

danlightbulb said:

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.

You sort of think you're over exposed to the UK but not quite sure it's a good idea to reduce it. Worth remembering doing nothing is still an option. If nothing's really broken then why look for a fix?

Yeah I guess that's a good summary.

Doing anything is a risk. Doing nothing is a risk. There's no right answer. Historically speaking, what I have is broken, but that's not to say it would remain broken in the future.

Ive read about investors having a bias towards their home nation. I don't think I have a bias towards the UK, only a bias towards the fund Im already in and a fear of making a bad move.

Prism

danlightbulb said:

If a geographical split is representative, why don't funds put more in China? China and Hong Kong has 15% of the global market cap from what I can see?

Prism said:

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.

How is your UK fund up for the year, whereas mine is down? The global component (50%) of my 50/50 fund must be up, because all the other global ex-UK funds are up, so for my whole fund to be down it must be being dragged back by the UK component. Yet yours is up? Wouldn't they be investing in broadly the same companies?
*edit - or do you mean the current financial year is up? If so, yes I can see that but that's only because it dipped so badly in March?

I don't have any general index funds with an allocation to the UK at the moment so all of my UK exposures comes from active funds, the bulk of which is split over just 13 companies - few enough so I can keep track of them. 6% is an approximation but reasonably close.

danlightbulb

Im taking a comparative look at the different regions index funds in trustnet.

Until around 2012, these funds were all similar, then they began to diverge massively. 

The emerging equities fund didn't do much at all until about 2016 when it began to increase alot.

The UK funds saw decent growth over ten years, but the US fund doubled this easily but not straight away, it began to pull away around 2013 ish.

The Pacific area didn't do a great deal until 2016 then began to rise faster.

Europe and Japan appear to be broadly similar.

Not surprisingly, the 50/50 fund I am in has performed about halfway between the US dominated funds and the UK only fund.

So if Im changing my mix, really what Im saying is Im going after more US equities, because that's the only difference between my existing fund and the new fund. I know the US is a massive contributor to global markets, having nearly half of the world's market share. Is proportionality itself a good enough reason to make the change?

Albermarle

danlightbulb said:

Im taking a comparative look at the different regions index funds in trustnet.

Until around 2012, these funds were all similar, then they began to diverge massively. 

The emerging equities fund didn't do much at all until about 2016 when it began to increase alot.

The UK funds saw decent growth over ten years, but the US fund doubled this easily but not straight away, it began to pull away around 2013 ish.

The Pacific area didn't do a great deal until 2016 then began to rise faster.

Europe and Japan appear to be broadly similar.

Not surprisingly, the 50/50 fund I am in has performed about halfway between the US dominated funds and the UK only fund.

So if Im changing my mix, really what Im saying is Im going after more US equities, because that's the only difference between my existing fund and the new fund. I know the US is a massive contributor to global markets, having nearly half of the world's market share. Is proportionality itself a good enough reason to make the change?

If you can not make your mind up then just change 50%, or 25% .
I was in a similar position not that long ago . Too much UK due to older pension funds . I have just changed it gradually/in stages . Of course after this year I wish I had changed more .On the other hand I am more exposed to UK for non equity investments than equity and in my opinion that is less of an issue. 

danlightbulb

Ive just explored how to switch funds on my Aegon dashboard and have come up against a complication.

My two current funds are in a 'group' so I can't individually move money just out of the 50/50 equity fund and into the global equity fund, it looks like it will move a proportion of the whole group out (i.e including what's in my existing multi-asset fund).

I was going to sort out equities first then change the bonds element later but now I might have to do it all together.

danlightbulb

We've talked about equities alot now but haven't really talked about bonds and I know alot less about what these really represent.

The multi asset fund I'm currently in for 30% has a mixed range of cash, bonds, debt, and some equities as well.

Can anyone suggest how I should be looking to configure the bonds side of my portfolio please?

This is what my bonds side currently looks like:

Albermarle

Can anyone suggest how I should be looking to configure the bonds side of my portfolio please?

Bonds is an whole new area and I would venture to say less well understood by your average DIY investor ( including me but learning ) 

Hence partly the reason for multi asset funds , so you do not have to get to grips with the complexities of bond markets .