New workplace pension provided by Aviva Mercer

tel_

Whilst doing much research into my workplace pension this afternoon, I compared various factsheets, including one called the Mercer Passive Shariah fund.  To my surprise, this fund over the past 5 years has performed the best out of all the funds:

Sharia -           15/16  33%,  16/17 13%,  17/18 18%,  18/19 12%,  19/20 23%
Benchmark -              34%             13%             18%             12%             24%
Sector Average -        27%            14%              10%              6%               2%

It has a risk rating of 6 (the same as the Active Global Equity fund), and the charges are slightly cheaper:

Sharia -  Annual   0.47%    Additional  0.30%
Global -                 0.79%                     0.04%

It does have a high geo allocation of 70.7% for North America, which explains the rate of returns somewhat.

I'm tempted to invest in this fund, but I'm tempted to treat it as a satellite fund, alongside the Active Global Equity fund.

I know that's my decision, but do others think investing in it with a small percentage of say, 10-20% of a person's entire pension, is sensible?

Any thoughts on Sharia based funds are more than welcome.

Alexland

As you say Sharia funds will have done well recently due to their high US bias (and often a sector bias towards technology and healthcare) however be careful not to chase yesterday's return. Do they not have any of the basic building blocks such as a passive global equities (with or without EM) or bond index fund? If not then I would look into if it might be possible to partially transfer out lump sums into a SIPP while remaining a contributing member however it would have to be a good sized SIPP to be cost efficient.

tel_

Alexland said:

As you say Sharia funds will have done well recently due to their high US bias (and often a sector bias towards technology and healthcare) however be careful not to chase yesterday's return. Do they not have any of the basic building blocks such as a passive global equities (with or without EM) or bond index fund? If not then I would look into if it might be possible to partially transfer out lump sums into a SIPP while remaining a contributing member however it would have to be a good sized SIPP to be cost efficient.

The literature states: "In line with the performance of the Dow Jones Islamic Titans 100 Index, the fund invests one or more passively-managed underlying fund(s) that invest in company shares from around the world, and are compliant with Islamic Shariah principles". I take it this does cover the passive global equities question sufficiently enough?

As for a bond index fund, that is not mentioned, but it certainly doesn't invest in high yield bonds.

And you are most certainly correct Alexland about the bias towards technology & healthcare - 41% & 20% respectively.

tel_

I can't seem to find a listing for the Dow Jones Islamic Titians 100 Index on the HL or Trustnet websites. Is the only one available for this Index available to view here on the S&P Global site?:

https://www.spglobal.com/spdji/en/indices/equity/dow-jones-islamic-market-titans-100-index/#overview