DC Pension Funds Selection

mark55man

Thanks Mistermeaner - I am heading in that direction already with the equities.  I think my next step is to stop over thinking the bonds element.  Maybe even removing them, as I have a DB pension that acts in that fashion from an overall perspective.

I will continue to make rebalancing decisions eg UK overweight this year - as I am happy with my annual return - and whilst I accept the observation, I generally make change twice a year - the sheer volume of covid in India spooked me (although its now clear I have double standards when it comes to UK's own challenges in that respect)

mark55man

One final update, following an interesting set of discussion with my provider, it turns out that the core Vanguard funds offered are seen as too cheap at 0.5% to benefit from a work related discount.  However equivalent funds (ishares or Vanguards own more niche 50/50 Global/UK) end up reduced to 0.25% as they started above the cut off.  So executing a few tactical cost-reducing strategy-preserving moves, but still retaining the higher cost satellite funds my total platform and fund charges on a low 6 figures pot is just under 0.4%.  My initial charges were maybe £300 per year more expensive, so I am gratified at the result (and thanks to all the contributors) as that will be a £2K by my current retirement date

My funds are now:

• Vanguard - 50/50 - UK FTAS - and World Ex UK: = 60% (@0.25%) - ie an active decision to equal weight UK and the rest
• Gold - 10% (@1%) - insurance
• Bond Funds - 20% @(0.25%) - Have decided to accept the brake they put on growth given proximity to retirement 
• European & UK Smaller Cos - 10% (@1.5%) -  Conviction play that small cos will bounce back, but not so much in US

Mistermeaner

Still a strange mix for me : you're massively overweight in Uk and therefore underweight ROW and particularly usa so missing out on where a good chunk of growth has been in 2020

Also just having uk and eu small companies misses out on usa small comps which is another decent sector 

Gold is waste of time IMO and very expensive to hold , if preservation is the objective go cash or gilts 

What's your plan for drawdown ? There's a good thread here somewhere that suggests 100% equity is the way to go even in draw down 

mark55man

OK - so intentionally overweight UK as a value play post Brexit.  I'm happy not being full weight in the USA and being overweight UK is my way of reducing that.  I will reconsider the US smaller companies piece.  I'm partial to gold (Blackrock Gold and Miners) as it has provided some very profitable gold top slices - looking forward I'm still happy to hold.  I'm not a gold bug !

Drawdown is a consideration, but 3-5 years away and which is why I stuck with some bonds to moderate peaks and troughs.  I have seen the analyses that suggest 100% equities work best where they don't break - but as retiring early will mean I will have quite large withdrawals in the first few years before easing off as other DB and state pensions kick in - so I am sensitive to sequence of returns risk - and really do want to retire as early as possible. 

Mistermeaner

maybe have another think about the gold; at 1% charge over 20years your gold will have to increase in value by 20% just for you to have stood still; there's much better ways to achieve value preservation than holding gold

cfw1994

Well, you posted looking for comments: my comment is that I believe being overweight in the UK this year will not help your funds grow more than if you had a more Global, and certainly more US-centric spread.  There you are: my comments!

It is all just opinions though - I know I could be wrong, you know you could, eh!

squirrelpie

cfw1994 said:

help your funds grow more than if you had a more Global, and certainly more US-centric spread.

I think the US is a massive bubble, so you'll continue to get very good gains until the bubble bursts and then get a massive loss. Everything depends on your attitude and your skill or luck in timing the burst.

Thrugelmir

No emerging markets? 

That's a high % for gold. 

Do you have access to ETF's? 

Linton

Very high % UK.  Doing it on your predictions for the future is high risk.  Investing highly in one comparatively small area is high risk.  WIthin your UK holdings Investing highly in FSE100 companies which have an "unusual" split of sectors compared with the restof the world is high risk. It also constrains your diversification as it leaves little room for other things.  Which means you will miss out should the real growth occur elsewhere

I do not believe my opinions as to the future are likely to be sufficiently accurate to base my life savings on them.  So your portfolio isnt for me - too much risk with too little opportunity for an upside

BritishInvestor

squirrelpie said:

cfw1994 said:

help your funds grow more than if you had a more Global, and certainly more US-centric spread.

I think the US is a massive bubble, so you'll continue to get very good gains until the bubble bursts and then get a massive loss. Everything depends on your attitude and your skill or luck in timing the burst.

Surely depends on the share. If you've piled into shares such as Netflix and Amazon it's a completely different story from shares with less elevated valuations