Pension recovery performance 2020

MarkCarnage

SIPP is up about 1% after taking account of tax free cash withdrawal. It's my 'low risk' fund and was held back by too much UK exposure in equity income ITs. Also holds some wealth preservation investment trusts which have done ok and well in line with expectations. Couple of poorly performing niche debt funds. One has recovered  bit recently, the other not. Both still paying the coupon though which is good. LTA still likely to be an issue at some point despite the modest growth. However, there are worse problems to have. 

ISA account which is a bit bigger (certainly now!)  is up about 25%, and share account a little less than that c21%. ISA held back a little by some private equity exposure which is probably lagging the listed equity market a bit, also switched a bit into WP ITs quite recently as a couple of growth holdings had become too big. Probably got a bit much liquidity in it too, as didn't invest all this year's contribution and had some income too. 
Overall, not unhappy. 

itwasntme001

I need to consider capital gains taxes as well at some point.  In my GIA account my total gains left to be "monetized" for CGT purposes is around £70k.  Luckily my WP fund sits in this account so the taxable gain would have been worse if it were the other way around.  But given the chances of the CGT hike, I am a bit concerned how I will manage this.  I really hope the 12k tax free threshold remains.

MarkCarnage

A lot of comment on some BG ITs here...yes SMT runs some concentrated large positions, but it didn't buy 12% of Tesla, or 10% of Amazon, they have evolved to that and have been held for years . It also has quite a large 'tail' of pretty small holdings, some unlisted. One or more of these may be the next Tesla, ten or more of these will vanish without trace....
As an indication, a portfolio split between Monks, EWW and SMT would have delivered about 70% this year. Of course that's unsustainable, but do you want to guess when?   5year compound performance of SMT is 32% p.a. Several years performance has been compressed into one. I hold all three but reduced exposure recently as they had become disproportionate size in the portfolio. 

itwasntme001

MarkCarnage said:

A lot of comment on some BG ITs here...yes SMT runs some concentrated large positions, but it didn't buy 12% of Tesla, or 10% of Amazon, they have evolved to that and have been held for years . It also has quite a large 'tail' of pretty small holdings, some unlisted. One or more of these may be the next Tesla, ten or more of these will vanish without trace....
As an indication, a portfolio split between Monks, EWW and SMT would have delivered about 70% this year. Of course that's unsustainable, but do you want to guess when?   5year compound performance of SMT is 32% p.a. Several years performance has been compressed into one. I hold all three but reduced exposure recently as they had become disproportionate size in the portfolio. 

Yeh I own all 3 as well (well the OEIC versions of monks and eww).  Haven't reduced yet.  Am conflicted between letting your winners run and rebalancing.  I am only in my 30s and my total portfolio size is in the 7 figures.  So its the age old question - worth risking a sizeable portfolio for more gains, or reducing risk as more returns are not really needed?

zagfles

dunstonh said:

garmeg said:

Deleted_User said:

Audaxer said:

dunstonh said:

I just wondered what sort of performance people were experiencing with their pension investment during this tumultuous year. 

Apart from one month of falls which were quickly recovered, it has been a good year.  

Is this typical, above or below what people are generally seeing?

It depends on their risk profiles.   Our worst performance, for YTD, is the lowest risk at 4.62% and best performance is the highest risk at 33.85% with medium risk coming out at 18.69%.     

dunstonh, an 18.69% gain for this year to end November is a very good return for a medium risk portfolio. If you care to share, I'd be interested to know the percentage of equities to bonds and the percentages of growth equity to value equity for your medium risk portfolio?

This is more than S&P 500 YTD, much more than FTSE100 or the world market YTD and more than Buffett’s long term return.  And then there was his “aggressive” return which is much higher. If true, this is something fairly concentrated in US tech and not “medium risk”. Also, unsustainable.  If anyone within the financial industry could consistently deliver this kind of outperformance over a meaningful period of time, they would be multi-billionnairs. We often see claims like this from the vendors of financial services. 

i don't think dunstonh would lie. If those rates stated were achieved then I have no reason to doubt him (or her!).

It doesn't suit the agenda of the anti-IFA brigade to see IFA portfolios return more than their beloved options.  They don't bring it up when DIY investors get higher returns, as many do.  They just take issue when an IFA portfolio does (and many IFA portfolios do).

That's because "DIY" investors don't sell their services to anyone. If I posted that my portfolio had done much better than the major indices, nobody's going to PM me asking me to invest their money for them.

Do they ever with you?

[Deleted User]

We all like to brag. Makes us human.  The postings about YTD or 12 months returns intensified after November.  We know why. And in most cases the posters don’t specify what they mean by “return” when they throw a bunch of numbers.  I can see that most of this would be unhelpful to an inexperienced investor who is trying to pick a strategy.  

Still, its a chatroom.  Smarter people realize that specific tips and supersized but meaningless short term gains reported here are worth zilch.  

It’s different when a professional provides misleading information on what is “moderate” and throws meaningless numbers over a period less than a year all the while promoting high cost options. Or badmouths less risky diversified plain vanilla funds.  Then  it becomes bad investment advice. 

Prism

Like it or not investment risk is measured by volatility rather than some abstract concepts like being overweight a sector, being different from the index, high conviction of few holdings or manager risk. Based on that and the ability to put together a portfolio of funds based on reducing that volatility by blending the right combinations of sectors you can indeed create an allocation which can boost the chance of returns while also reducing risk. 

How someone attempts to do that is up to them. It is exactly what I try and do with my fund selections and allocations between funds - and it seems to work. For example Trustnet tells me that my SIPP has a risk score of 71 which is much lower than the score of some of the individual funds I hold while the performance has been better than single funds of a similar risk level. I have taken a lower level of risk and got higher returns, at least historically. I have no reason to believe that this is all going to fall apart for some reason just because how could it possibly continue forever. 

If us DIY investors do this, risk based multi asset funds like HSBC Global Strategy do this why do we presume that IFAs aren't doing this. Isn't this an important role of asset allocation. 

itwasntme001

Prism said:

Like it or not investment risk is measured by volatility rather than some abstract concepts like being overweight a sector, being different from the index, high conviction of few holdings or manager risk. Based on that and the ability to put together a portfolio of funds based on reducing that volatility by blending the right combinations of sectors you can indeed create an allocation which can boost the chance of returns while also reducing risk. 

How someone attempts to do that is up to them. It is exactly what I try and do with my fund selections and allocations between funds - and it seems to work. For example Trustnet tells me that my SIPP has a risk score of 71 which is much lower than the score of some of the individual funds I hold while the performance has been better than single funds of a similar risk level. I have taken a lower level of risk and got higher returns, at least historically. I have no reason to believe that this is all going to fall apart for some reason just because how could it possibly continue forever. 

If us DIY investors do this, risk based multi asset funds like HSBC Global Strategy do this why do we presume that IFAs aren't doing this. Isn't this an important role of asset allocation. 

Risk is not just volatility, and yes it is also all those other things you call "abstract".  Just because you can't measure it quantitatively, doesn't mean its not a risk.  But it also doesn't mean you "have" to manage these risks.  You do you.

Whilst you may have suffered lower drawdowns compared to your benchmark, that is no predictor of future drawdowns.  Ask yourself why you hold funds that only have been around for the last 10-15 years?  Why don't you hold a single fund with more than 20 years of history?

It's because styles go out of fashion because the macro environment changes.  No matter how good a fund mamager is, they are only ever as good as the environment enables them to be.

[Deleted User]

Doubling index return over a short period of time means nothing. Shouldn’t even be mentioned by a financial professional other than in the regulated context.  Doubling index return over a long period of time while having lower risk is different. That would be noteworthy.  Because it just does not happen. Ever. 

Yes, a few investors outperformed index long term. My “favourite” Buffett has done it.  But he did it by taking huge risks.  He wasn’t diversified early on.  And I don’t know how much Buffett is worth but its in tens if not hundreds of BILLIONS.

If an IFA is confident he can outperform the index long term, why is he an IFA? If 15% is what we normally expect from his “moderate” portfolio then why isn’t he Warren Buffett? Take 100k.  Compound it at 15% for 35 years. You’ll have 13,317,552 quid.  Except if you are confident in outperforming the index by that much at moderate risk, you should be borrowing as much as you possibly can and plowing it all into the market.   You’d be a billionaire in no time at all. 

“Us DIY investors” can do and say all sorts of things. A website could be using a dodgy algorithm.  If you are beating the index by a lot then you are concentrated in something and you better be ready for a prolonged period of underperformance. 

Prism

itwasntme001 said:

Prism said:

Like it or not investment risk is measured by volatility rather than some abstract concepts like being overweight a sector, being different from the index, high conviction of few holdings or manager risk. Based on that and the ability to put together a portfolio of funds based on reducing that volatility by blending the right combinations of sectors you can indeed create an allocation which can boost the chance of returns while also reducing risk. 

How someone attempts to do that is up to them. It is exactly what I try and do with my fund selections and allocations between funds - and it seems to work. For example Trustnet tells me that my SIPP has a risk score of 71 which is much lower than the score of some of the individual funds I hold while the performance has been better than single funds of a similar risk level. I have taken a lower level of risk and got higher returns, at least historically. I have no reason to believe that this is all going to fall apart for some reason just because how could it possibly continue forever. 

If us DIY investors do this, risk based multi asset funds like HSBC Global Strategy do this why do we presume that IFAs aren't doing this. Isn't this an important role of asset allocation. 

Risk is not just volatility, and yes it is also all those other things you call "abstract".  Just because you can't measure it quantitatively, doesn't mean its not a risk.  But it also doesn't mean you "have" to manage these risks.  You do you.

Whilst you may have suffered lower drawdowns compared to your benchmark, that is no predictor of future drawdowns.  Ask yourself why you hold funds that only have been around for the last 10-15 years?  Why don't you hold a single fund with more than 20 years of history?

It's because styles go out of fashion because the macro environment changes.  No matter how good a fund mamager is, they are only ever good as the environment enables them to be.

I agree that they are in fact risks however since they are not measurable and partly because of that nobody agrees on what level or risk they are then I see little point using them as any sort of comparison. Some would claim that holding just 10 selected diverse stocks is as low risk as required - others would rather hold several thousand in a tracker. Who is right? If anyone is going to claim that somebody who gets better returns must be taking more risk then they will need to try prove that somehow - with some stats or ratios. The whole investment model uses volatility for comparison. Is there another statistical measurable one that we are missing?