Aviva Pension Fund choices

cfw1994

dunstonh said:

Because a portfolio constructed by an IFA cannot “lose up to half your value during negative periods”?
Is that a fact?
If *global* funds have lost half their value....it is pretty likely most other funds might also have lost a significant chunk, no?
Or is this an argument for finding the magic fund managers who consistently beat ‘the market’, year in, year out?  A bit of a unicorn find, I would suggest!

Why are you trying to turn a comment about volatility/risk into being about IFAs?

Only because of the tone of the comment, & the OP replied to ask about IFAs.
I do feel it needs clarifying, apologies for causing offence!

You call Global Trackers ‘very high risk’.  A boldly stated description (& what I meant by ‘the tone’).

I’ve generally seen them as rated 5 on a 1-7 scale (Aviva, for example). 

Yes, moderately high, but most equity-based funds will be 4-7.    6 and 7 would count as ‘very high’, in my mind.
Feel free to expand on definitions of risk!

I’m clearly not an advisor....but I would not call that very high.   

Your statement ‘ If you can handle losing half your value during negative periods then fire away.’ psychologically puts a less knowledgable person on the back foot - it sounds scary!   The sort of phrase that might cause fear.   Not too sure why you expressed that, especially for someone who posted

Louisdawg said:

Looking at the aims of the fund and its performance it feels a little conservative for someone with maybe 20 years of pension contributions to go.

With 20 years to go, I would have thought having a moderately high risk global tracker could be perfectly well suited, no?

JohnWinder said:

Louisdawg said:

Still the question still stands - is the Aviva mixed investments 45-85% any good or is it just a default fund which you should move away from?

<some good stuff here>

You might want to read this exchange about exactly the fund you enquired about, here: https://www.bogleheads.org/forum/viewtopic.php?t=320254

And read about choosing funds, in general, here: https://www.bogleheads.org/forum/viewtopic.php?t=218690

Good stuff, and a couple of excellent discussion links, thanks!

Louisdawg

JohnWinder said:

Louisdawg said:

Still the question still stands - is the Aviva mixed investments 45-85% any good or is it just a default fund which you should move away from?

To answer that I suppose you might wonder how well diversified it is? It’s mostly equities and bonds/cash, but good luck finding out exactly what it holds apart from ‘Energy equities’ or ‘dividend equity future’ etc. As a guess it’s probably well diversified. What are its costs? Almost pointless looking for that information since the fund is composed of other Aviva funds, and different platforms etc seem to alter the fees that might be reported somewhere else. Does the fund ‘style’ or ‘strategy’ drift? Well, it’s named a 40-85% equity fund, so I suppose the managers allow themselves to alter the equity percentage quite widely, currently at about 75%. Please yourself if you think that’s a good idea, but if you want a ‘high-ish’ risk equity-type fund you won’t be getting that if they drop the equity holdings to 50%. As well, we know from the SPIVA research that active fund managers fail in their struggle to beat index fund returns over the longer term, in the large majority; so do you favour actively managed funds?

Aviva lists hundreds of pension funds like yours. One would imagine that would cost more than offering dozens, which one would imagine could be enough to cover the investment world. If there are unnecessary funds, who's paying for them to exist, run, be promoted etc? Hopefully not the customer.

You might want to read this exchange about exactly the fund you enquired about, here: https://www.bogleheads.org/forum/viewtopic.php?t=320254

And read about choosing funds, in general, here: https://www.bogleheads.org/forum/viewtopic.php?t=218690

Thanks so much John - some great reading in those links you posted.

Thank you! 

dunstonh

You call Global Trackers ‘very high risk’.  A boldly stated description (& what I meant by ‘the tone’).

100% equity would typically put someone at the top of most risk scales.     Although 100% equity itself isn't a good way to measure risk by itself as you could have 100% equity in a FTSE100 tracker and that would be a higher risk due to lack of diversification.  Or 100% equity in small-cap emerging markets. or focused/niche investment area.

Some risk scales would put a global equity fund with a diverse spread one notch below the top to cater for the top one being "exotic".

The language used on risk scales vary.  But you typically see the highest one called speculative, very high risk. adventurous etc.

Your statement ‘ If you can handle losing half your value during negative periods then fire away.’ psychologically puts a less knowledgable person on the back foot - it sounds scary!   The sort of phrase that might cause fear.  

No-one is unhappy when investments go up in value.  The issues come when it goes down.  That is when people's tolerance, behaviour and knowledge/understanding really tells you if they have the right risk level.       The fund is capable of losing 50% in a 12 month period.  If the person accepts that will happen periodically and can handle it then great.

 The average UK consumer does not have the risk tolerance to be 100% equity.   They get scared with 5-10% falls.  Putting someone like that in 50% loss potential investment will see them pull out at the worst time and will see them never invest again whilst telling everyone that you only lose money on the stockmarket.  Anyone that told you they lost money on the stockmarket did so because they either invested unconventionally and badly or above their risk profile.

With 20 years to go, I would have thought having a moderately high risk global tracker could be perfectly well suited, no?

Time does dilute risk.   Time should be taken into account and that could knock a global tracker down one notch on the scale.   However, it still doesn't mean that a up to 50% fall wouldn't go unnoticed and lead to a bad outcome.

It has been noticed that since the EU forced providers to issue quarterly statements instead of half-yearly or yearly, people are seeing the negative periods more closely and it has increased worry.      Worry can lead to people pulling out.   So, even with a long timescale, it doesn't necessarily mean the person should invest 100% equities.

The OP thought that a multi-asset fund with 85% equity ratio as conservative.   One person's high risk is another persons low risk.     My main objective in my responses was to try and nail down whether the OP realised it wasn't conservative or whether they actually had a high tolerance to risk.