a decent return on a SIPP?

chriswright

Good morning everyone,
I have been investing in a SIPP since 2015. My rate of return is equivalent to 7.7% pa, as of today. That is after platform costs and fees.
Would this seem to be a decent rate of return? I have no idea how to gauge this. Any thoughts gratefully received. 
Chris

Thrugelmir

Are you on target to meet your personal objectives? 

chriswright

Thrugelmir said:

Are you on target to meet your personal objectives? 

Thank you...obviously an important question.  I have a mix of final salary,  average salary and sipp for pension provision and need to update my sums in order to answer this!

Stubod

...I would be happy with that rate of return...

Marcon

Much depends on your attitude to risk and how long you've got to go until you want to start accessing your benefits. 

Alexland

It's better than cash but without knowing the risk you took it's hard to say if it was a good risk adjusted return. For example if this was achieved from a low risk less volatile portfolio then it's very good but from a high risk equities portfolio not very good as a global tracker fund delivered around 15% pa before platform fees. A balanced 60/40 fund returned around 10% pa before platform fees. Does your 7.7% pa include new contributions which would not have had the full 5 years to grow?

arnoldy

Yes I think a pretty good result. Well done. The reason being after charges you have matched the FTSE all share returns over the last 5 years.
FTSE All Share and FTSE-100 since 1985 (swanlowpark.co.uk)
But past experience [and experts orthodoxy] suggests if you up the % of smaller companies FTSE250, small cap, fledgling, AIM you tend to get better results long term.

Thrugelmir

arnoldy said:

But past experience [and experts orthodoxy] suggests if you up the % of smaller companies FTSE250, small cap, fledgling, AIM you tend to get better results long term.

Over certain periods of time. Historic comparisons are always made against what has done better. If we knew what the immediate future holds in store we'd all be multi millionaires

Albermarle

arnoldy said:

Yes I think a pretty good result. Well done. The reason being after charges you have matched the FTSE all share returns over the last 5 years.
FTSE All Share and FTSE-100 since 1985 (swanlowpark.co.uk)
But past experience [and experts orthodoxy] suggests if you up the % of smaller companies FTSE250, small cap, fledgling, AIM you tend to get better results long term.

I do not think most investors would measure their pension performance solely against UK indices .
Over the last 5 years the HSBC FTSE World index fund is up 100%. Before charges but these would only be very small.
7.7% pa after charges would be typical for a balanced 50% equity portfolio with a moderate home bias , like a typical default fund maybe .
I think we would all be pleased with that result over the next 5 years , regardless of the investment strategy.

OldMusicGuy

It's a pointless question. It's really important to set investment objectives, because that's how you gauge the "decency" of returns. I am sure there are plenty of people that have done much better than you. However, they may be comfortable with higher levels of risk than you, they may be aggressively going for growth because they are early in their investing phase. Conversely, I am targeting growth of around 3% after costs but then I have just retired, rely totally on my DC pot, and have invested defensively against sequence of returns risk. Only you can answer this based on your own objectives.

MK62

What OMG said... .......though I'd add that you also need to factor inflation into your thinking (your pound buys about 10% less now, on average, than it did back in 2015)

As for the 7.7%pa return after costs - that's about ballpark for a typical "balanced" multi asset portfolio (with probably around 60% or so in equities).

A more adventurous portfolio (ie usually a higher % of equities) would generally have done better.......but that's with hindsight looking back - there no guarantee that will repeat over the next 5 years......

A more defensive portfolio (ie usually a lower % of equities) would generally have done worse.......again, that's with hindsight looking back - and again, there no guarantee that will repeat over the next 5 years either.....

As OMG said, much will depend on your personal circumstances as to whether you should view it as good or bad - although personally I wouldn't view anything which has returned about 5% more than inflation, as "bad" per se, even if something else might have done better (that's always the case anyway).