DC Pension Funds Selection

squirrelpie

BritishInvestor said:

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.

To some degree, of course. But most of the US is in bubble territory, IMHO.

mark55man

I only have access only to funds and not ETFs (about 300) - I could transfer out as the costs for most of the funds are a bit higher than equivalent ETFs, but because of discounts I'm mainly paying 0.2% on the UK and World funds.  and that's good enough for now and for my scale of pot

the recent set of comments reflect my own debate - too high US risks caught in that storm, too unbalanced risks concentrating risks elsewhere.  So its a good point, they are not my whole life savings, although pension is most of my savings. I have a private DB (been closed for a decade but I have 20 years service), and this SIPP represent my DC savings since then.  Its partly because of concerns about investing this DC pot that I am moving away from my early fascination with CETVs and transferring out - and possibly more down the line of taking it a few years early.  

I am not piling into individual shares, especially not in the US - I do have a separate fund (ex SERPS, that I have grown by 4% pa over the 10 years with great volatility by doing that, and its been educational and I will carry on, but this part of my strategy is funds).

US vs UK - I just worry that in VWRL or equivalent I am just too exposed to the US Market.  I Know USA has had great returns, I just don't feel happy with 2/3 of my life savings in the USA both at the moment and/or ever. I'm sorry if that's too active - but for me a VWRL approach is just unappealing.  Now I accept 50:50 (ie 10 times overweight UK is a lot of home weighting).  

GOLD - as per previous answer I made a lot of early gains in my portfolio with Blackrock as I went from 40p to  70p, then back down and back up again to 90p, and by top slicing it periodically whenever it exceeded 15%. Plus it moves counter to other asset classes, and a lot of the classic portfolios have used it to minimise volatility.    

BONDS - I think I have a bit of work here on the precise composition but for now I don't want any less, if anything I might increase that %age given my retirement profile is quite demanding early with more fixed income coming in at 65, then 68.

So I will stick on current position for now and see how the next 3 months goes - ie  10% GOLD - 20% BONDS - 70% equities (split  30%:30%:10% between UK, World and Smaller Companies)

BritishInvestor

squirrelpie said:

BritishInvestor said:

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.

To some degree, of course. But most of the US is in bubble territory, IMHO.

I think you need to differentiate between growth and value. I wouldn't say value style share are necessarily in bubble territory.
https://www.twocenturies.com/blog/2020/5/4/value-crashes-deep-history
https://www.aqr.com/Insights/Perspectives/Is-Systematic-Value-Investing-Dead

mark55man

Thank you @BritishInvestor - very interesting links.  My inclination to overweight UK is based on it having a high percentage of value stocks at the moment.  Possibly USA has more than I gave credit for, but are overweight growth

BritishInvestor

mark55man said:

Thank you @BritishInvestor - very interesting links.  My inclination to overweight UK is based on it having a high percentage of value stocks at the moment.  Possibly USA has more than I gave credit for, but are overweight growth

It's certainly an interesting time. Value does seem relatively cheap, but that's to say it won't get even cheaper, or maybe it really is "different this time", and growth share valuations will remain permanently elevated.

mark55man

Just in case any one is interested, the usual suspects have been providing predictions for 2021 (mainly from Dec 2020, so post the US election, but before the riots and the runoff in Georgia, but pre the accelerating vaccination programme).

you can find plenty by googling, but this one read really well https://www.blackrock.com/corporate/literature/whitepaper/bii-2021-global-outlook.pdf 

Its focus is on active (doh! obviously), but matches a previous post observation about Emerging market, so in a final tweak I am going to to split my FTSE All share exposure 66:34,  so equity is now 30% World, 20% UK, 10% Emerging, 10% Global small cap).

Thanks for your insight and patience - I know some of you are still thinking why not put it all in a Global Multi Asset fund.  I will agree to disagree, and live with the consequences of my decisions - but I do feel they are now better balanced as we start this next period 

Mistermeaner

Need to understand what is in your "world" fund - I expect mostly usa but likely good chunks of Europe , Asia Pacific etc and uk too .... X-ray world and see how it affects your overall allocation 

cfw1994

squirrelpie said:

BritishInvestor said:

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.

To some degree, of course. But most of the US is in bubble territory, IMHO.

What *convinces* you of this?
Sure, there are some weighty stocks like Tesla that make us all wonder '!!!!!!?'....& of course many of us wonder how the world of stocks will pan out with the COVID bill to pay....
....but aside from those: looking at the long term performance of the main indices, I would suggest only the NASDAQ looks seriously out of whack:

(purple and red being the S&P500 & the Dow).
Always had an interest in this side of things, since the company I joined over 20 years ago did this green line a year or so after I joined:

  

& a reason I have less respect for people who focus on UK indexes: bring the orange FTSE line in for the past 5 years shows you this:

Sure, there may be some good dividend stocks in there, but.....

mark55man

very interesting post thank you - or in other words, UK was fine until Brexit started having its impact then it just sort of slowed down, and now we're through the (mis)planning and merely suffering the teething troubles, I am entirely convinced we will prosper relatively - because we have all stopped digging a hole and are all going to focus on getting well.  Now whether we will do better than the US/NASDAQ well that's a different matter, but as above I feel unhappy having 2/3 of my POT overseas - esp with trouble looming (although a huge influx of government spending is also looming) which may counteract that   

cfw1994

mark55man said:

very interesting post thank you - or in other words, UK was fine until Brexit started having its impact then it just sort of slowed down, and now we're through the (mis)planning and merely suffering the teething troubles, I am entirely convinced we will prosper relatively - because we have all stopped digging a hole and are all going to focus on getting well.  Now whether we will do better than the US/NASDAQ well that's a different matter, but as above I feel unhappy having 2/3 of my POT overseas - esp with trouble looming (although a huge influx of government spending is also looming) which may counteract that   

I suspect some of the UK dip may be currency related....

I also wouldn't blame Brexit: here is the view for 2011-16:

2010-15:

Earlier time windows (have a go on Yahoo!Finance - free to use, really easy!) show things a bit better....but I'd still rather not have my funds in the UK

So: just for the contrarian view, since UK is merely 5-6% of "the World", I'd be unhappy with more than 10% of my funds in UK indexes!

When I add in that our "emergency funds" are in Premium Bonds (UK), our property is UK (albeit many would not count that), some small (stupid!) cash ISAs in sterling....plus I suspect my DB funds will be invested in the UK....
....I'm happier with my equity exposure being WAY more US/global focussed     
I'm sure some companies will crash & burn - they always do in the tech world - but the speed of change is accelerating, and I suspect there will still be money made in the US funds.....

BUT.....my crystal ball is no clearer than anyone else's here ;-)