New workplace pension provided by Aviva Mercer

tel_

Our workplace pension is to be transferred shortly to a new provider - the Mercer Master Trust. My company will have its own section within Mercer, and it's own selection of funds to choose from (including a default fund of course).

On first analysis at looking at all the funds available (about 40 to choose from), I'm initially drawn towards a higher risk, diversified fund like the Aviva Pension MyM Mercer Active Global Equity fund (see image below) as I'm 20+ years away from retirement. 

Would this be a similar option to say the HSBC Global Strategy Adventurous Portfolio, or even the Vanguard LifeStrategy 100 fund?

I appreciate there are no exact 'like-for-like' funds out there, and I don't have any comprehensive details of these new funds yet (apart from the image attached, along with the default Growth/Balanced Risk SV fund which I've included).  But this is just my initial thought on what to go for - plenty of time to dissect each fund accordingly.

Also, whilst the default fund charges seem to be reasonable (0.22 + 0.04 = 0.26) the higher risk Global Equity fund seems to be rather pricey to me (0.79 + 0.04 = 0.83).

Any thoughts?

AlanP_2

You will need to look at the fund factsheets and see what the underlying investments are but on first look the Active Global Equity is going to be 100% equity in active funds so broadly similar to the 2 alternatives you referenced but with less reliance on trackers.

BTW - I read the 0.26% and 0.83% fees as the total not additions to the other 2 numbers.

tel_

AlanP_2 said:

You will need to look at the fund factsheets and see what the underlying investments are but on first look the Active Global Equity is going to be 100% equity in active funds so broadly similar to the 2 alternatives you referenced but with less reliance on trackers.

BTW - I read the 0.26% and 0.83% fees as the total not additions to the other 2 numbers.

Thanks for casting your eye over them AlaP_2.

Yes, you are right about the fees, I've corrected this on the OP - silly me.

The higher risk ones do seem rather pricey to me though (some go to a risk 7). I would have thought my employer would have got a better deal on the fees, but maybe they are discounted and are reasonable for a pension fund?

Albermarle

Another point to look out for is that these traditional pension providers funds tend to have a high UK% , which in recent times at least has dragged on performance. Its an arguable point about what the %UK should be ( different opinions abound) but usually 5% is a minimum and maximum should be no more than 30% . Somewhere in between is also favoured by some .

tacpot12

Agree with Albermarle on the level of UK focus that is appropriate at this time. I think with being 20+ years from retirement you are right to err towards the higher risk funds. I'm retired and still have my investments in high risks funds because I am hoping that I will need them to last another 30+ years!  

tel_

Albermarle said:

Another point to look out for is that these traditional pension providers funds tend to have a high UK% , which in recent times at least has dragged on performance. Its an arguable point about what the %UK should be ( different opinions abound) but usually 5% is a minimum and maximum should be no more than 30% . Somewhere in between is also favoured by some .

Yes, good point Albermarle. I will definitely look-up the UK allocations, especially as my S&S ISA funds have very little UK weighting to them currently.

It's the fund costs that are perplexing me at the moment. I know Vanguard's funds are some of the cheapest you can buy (LS 100 0.37%), with HSBC's GS Adventurous fund at 0.56%. But the Aviva Pension MyM Mercer Active Global Equity fund I'm interested in does seem ridiculously high at 0.83%. Am I right? The most expensive one listed is 1.08% for an emerging markets fund! I know I might be comparing oranges with satsumas here, but they do seem a little on the high side. Maybe this retirement saving platform offers something juicy in return that I don't know about yet    

Albermarle

You could also just as easily say that the 0.26% for the default medium volatility fund , including fund and platform cost is pretty low/very competitive . Why there is such a difference between that and the high volatility one is not clear though.
1.08% for an emerging markets fund is not that bad , presuming there is some active management involved 

tel_

Albermarle said:

You could also just as easily say that the 0.26% for the default medium volatility fund , including fund and platform cost is pretty low/very competitive . Why there is such a difference between that and the high volatility one is not clear though.
1.08% for an emerging markets fund is not that bad , presuming there is some active management involved 

Thanks for your comments on those funds Albermarle.
I will have to wait for the full details of these funds to be published, to evaluate any active management involved..

tel_

I now have the fund sheet available to me for the Mercer Active Global Equity fund, and the Geographic Allocation for the UK is given as 4.1%. N. America 65%, Dev. Europe 14%, Jap 6%, Dev. Asia 4%, Em. Asia 1%.

I'm comfortable with the UK's allocation at 4.1% (figures as at 30/09/20). I know this might be too low for some, but I'd rather it be lower than circa 30% in the current climate.

Annual Performance - 15/16 33%, 16/17 15%, 17/18 13%, 18/19 8%, 19/20 9%.

Market Capitalisation - Mega 27%, Large 36%, Medium 5%, Small 0.7%.

Here's the link to the fund sheet if anyone wants to cast an eye: https://www.fundslibrary.co.uk/fundslibrary.dataretrieval/documents.aspx/?user=QY9roCxMGds8ak0hOo6rIVndbOcGB9lRMbnHrPGpqvQ=&type=packet_lp_fund_unit_doc_factsheet&citicode=0T9P&r=1

I tried to look-up recent info on the fund from HL or Morningstar, but couldn't using the ISIN Code, only a FT one under the name of MGI Global Equity fund: https://markets.ft.com/data/funds/tearsheet/summary?s=IE00B19FTN86:GBP

I take it this is essentially the same fund that it mimics perhaps?

Albermarle

Aviva ( like other similar pension companies ) only offer their own insured funds ( means you have unlimited compensation in case of issues) Some of them are actually Aviva funds but like here they also kind of relabel other funds.
HL, like other SIPP providers , do not offer insured funds and yes often Morning star and Trustnet do not recognise them .

tel_

Albermarle said:

Aviva ( like other similar pension companies ) only offer their own insured funds ( means you have unlimited compensation in case of issues) Some of them are actually Aviva funds but like here they also kind of relabel other funds.
HL, like other SIPP providers , do not offer insured funds and yes often Morning star and Trustnet do not recognise them .

Am I wrong to use the MGI Global Equity fund as an up-to-date share price guide then, even though it has the same ISIN Code?