Feedback on current Pension fund allocation and pointers for improvement

frugalandsave

Hi everyone,

I was after some feedback on my current pension investments and the funds chosen. Please critique below and maybe give me some pointers where I can improve. Thanks

Overview:

Age 33 and in fulltime employment with a Salary of £48k.

State Pension: 16 yrs full contribution thus far

Work Pension: Provider Aviva with annual fund charge of 0.24 %. Currently invested at £42,186.38. Each month £1005 is contributed to this (employer/salary sacrifice). Funds are as follows:

Aviva Pensions BlackRock US Equity Index Tracker S6 -  52 % allocation

Aviva Pensions BlackRock Japanese Equity Index Tracker S6 – 22 % allocation

Aviva Pensions BlackRock European Equity Index Tracker S6 – 26 % allocation

Additional:

SIPP AJBell: £2200 with each month adding £25. Currently investing in VT AJ Bell Balanced Fund Class I Accumulation

Lisa AJBell: £2200 with each month adding £25. Currently divided between 60 % in Baillie Gifford American Fund B Accumulation and 40 % in GAM Star Fund plc - GAM Star Disruptive Growth Class Institutional GBP Accumulation.

ISA AJBell: £3500 with each month adding £75. Currently 100 % invested in VT AJ Bell Adventurous Fund Class I Accumulation

Thanks,

frugalandsave

MX5huggy

What’s the theory behind the allocations in the pension? 

That’s a big bet on Japan, I think the Europe fund is ex UK so you have nothing in the UK, which while the UK has under performed, it now represents good value. 

Basically why not a global all cap fund? 

Do you have free choice of funds? Or restricted? 

Are you prepared to ride out any storms? You have time.

The ISA’s and SIPP are low value currently so OK if you’re happy.

frugalandsave

I was hoping that Japan might do well at the back of the Olympics and it looked good when I added them. But I have been thinking to remove/reduce the size of the fund and replace with something else. 
I didnt add UK due to Brexit, but might be a good idea to search for a fund that represents that part. 
The funds selection are somewhat restricted, I can select from 150 funds.

Im happy to ride out any storms, it will still be there once I hit 55 or later if required.

[Deleted User]

Like MXP said, you are ignoring UK (except in Lisa/sipp, but the values are tiny). Your bet might work out but experts tend to recommend being overweight in domestic matkets.

Japan allocation is very large.   Japan is 6.5% of world cap. 

Missing out on developed markets except for Europe, US and Japan. Missing out on EM.

Looks like two different people are investing; one in your work pension and another one outside.  Are you using the latter as “play money”?  Generally, not a fan of this approach. Money is not for playing. 

bostonerimus

Your equities are highly concentrated geographically and why do you have so much in Japan? You seem to be buying with little overall strategy. You are young so being 100% in equities can be justified, but I would probably use a single world equity tracker, make sure you have a year's emergency cash in the bank and pay off any debt that you have. 

Just a note, with 150 funds to choose from you should have more than enough choice, you don't need a lot of funds to implement a simple and robust strategy.

MX5huggy

Have a read of https://monevator.com/category/investing/passive-investing-investing/ 

Albermarle

I didnt add UK due to Brexit

In terms of long term investing , Brexit is/was short term noise. It may well have a negative effect but the UK is the fifth/sixth biggest economy in the world and is not going to collapse because of Brexit . In any case the companies listed in London are in many cases more affected by what happens outside the UK than inside it .

JohnWinder

You’re doing pretty well with it all, although not to everybody’s liking as the useful comments already show. We can take a close look at some of those funds later, but chew on this, as a general comment:
Thinking Japanese equities might do well because of the olympics, or Brexit might harm UK stocks, is to consider one of only many scores, even hundreds possibly thousands of relevant issues many of which are perhaps more important than those you mentioned. Sure, I imagine you actually had other reasons that those countries’ equities might do well or poorly, but do remember, or be aware if not yet, that fund managers spend their waking hours considering those hundreds or thousands of issues you might have overlooked. They also quantify the impact of those issues, or try to, use computer models to make estimates, trawl through data you probably haven’t even heard of. Now, how well do they do when they invest? The majority, despite all that effort that makes yours look amateurish probably, can’t get better returns than an index tracking fund in the same market can get, when you compare their results for periods exceeding about 5 years.
What does that mean for you? It’s hard to imagine that anything other than luck will deliver you better returns than the professional managers get which is not even market returns mostly.  Do you want your investing fortunes dependent on luck any more than they already need to be? Some people do, no shame on them, but it moves you away from investing towards gambling. It’s fine to do, just recognise it; or give up thinking you can predict how the markets will behave so as to get better than market returns. End of sermon.
If you’ve got a useful rebuttal, we’d love to hear it.

Thrugelmir

frugalandsave said:

The funds selection are somewhat restricted, I can select from 150 funds.

From a 150 they must be plenty of options to create a broadly diversified portfolio first. Then take punts once the portfolio has reached a decent size and you can afford to take the additional risk. 

ex-pat_scot

 a couple of general comments.

1. your strategy /comments on Japan, Brexit etc.  These are relatively short term considerations (granted, they have long term consequences).  in MY opinion, such matters are already fully factored into the prospects both of individual countries' businesses through the share prices, and also in the relative strength of the economies via FX rates.
The market has far more information than you or I or any individual can absorb and process.
The collective market wisdom and analysis has resulted in the current prices.
So, unless you know something that the market doesn't, or you disagree with everyone (collectively), then you are being rather naïve in biasing your investments.

Following this theory to its logical conclusion, and it's indeed a big assumption that the market overall is efficient, then you should seek out a global diversified tracker. Plenty of articles and insights on Passive Investing from Monevator and many others.

2. you are contributing a small amount to your SIPP each month, with 20% tax relief, and a large amount to your GPPP via Sal Sac with 32% tax relief.
I know the amount is small, but why are you continuing to contribute to the SIPP at all? Why not divert any pensions savings fully to your SalSac GPPP? You get 32% relief (and possibly more, if the company also credits you with ers NI saved and is still matching contributions at your level).

3. I'm sadly way too old for LISA, but I would seek to max it out if I had spare funds, in preference to either the mainstream ISA or SIPP contributions you are currently making.

Tarama

I can only add to ex-pat_scot's comment below: 


3. I'm sadly way too old for LISA, but I would seek to max it out if I had spare funds, in preference to either the mainstream ISA or SIPP contributions you are currently making.

You can contribute £4000 annually to your LISA and receive a £1000 government bonus.