Value of pension is freaking me out

BritishInvestor

MarkCarnage said:

 so ignoring high growth companies based just on PE doesn't seem to be a winning strategy.

Agreed...with the very significant caveat that it's their future E that matters not the historic one. If the valuation of a company on 35x is based on consensus earnings growth of 20% compound, then you will get very different share price outcomes if the actual is either 30% or 10%........

Yep, see my point about value investing.

borland01

Great thread. I was in a similar frame of mind to the OP when I came looking for guidance, but comments above have helped me get some perspective.

Just to fill in my fact pattern a little. I have 3 pension pots (I'm only contributing into one of these at present) but my biggest percentage fall in December 21 - Jan 22 is in my largest pot, which is one I'm not contributing to. So in that sense I'm not benefitting from the fall in prices in the same way as I would if I was still making contributions.

When I look at the individual funds I'm invested in, one (60% of pot) has performed in the 1st quartile over 3, 5 and 10 years, but has dropped to 4th quartile when assessing over 1 year. I'm less concerned about that one as it might just be a short term deterioration in performance.

The second (40% of pot) has consistently been in 4th quartile over 1,3, 5 and 10 years, so I was thinking that one might be a good idea to move out of.

The performance data is coming from the fund factsheets on the Aviva website. 

Am I being too simplistic in thinking I should move out of the second fund, and if I do, where do I find the equivalent data for other funds (in a user friendly comparable format)?

Thanks for any help!

Twentytwothousand

Thanks for all the comments. I’m planning to retire in three years, hence I could do with some steady growth even if it’s modest.  All the pots in all three pensions are invested by them but it’s the biggest two pots in Avivas care that I’ve seen the drop in after what seemed like a good recovery post COVID. Should I ask them to move them to a safer set of funds?  Or perhaps just wait six months and expect to see it right itself  

Twentytwothousand

Audaxer said:

I think the OP must have a fairly high risk growth portfolio even for 100% equities, as VLS100 is only 1.6% down this year.

I shouldn’t have - aiming to retire in three to five years.  These drops were in the Aviva managed funds which they say are lower risk but should perhaps be lower still

Twentytwothousand

kinger101 said:

A 6 percent dip in one month isn't all that unusual.  You should be invested according to your age from retirement, and attitude and capacity for risk.  I'd say more than 10 years out from retirement 80-100% equities is fine.  

What are you invested in?

All the investments are managed by the three pension companies I’m with. Would you recommend me finding out more about them and being more directive? Didn’t really occur to me that I could move funds around within the pension company’s portfolio, only that I might not have funds being managed optimally! 

BritishInvestor

borland01 said:

When I look at the individual funds I'm invested in, one (60% of pot) has performed in the 1st quartile over 3, 5 and 10 years

While some might think this is positive, to me it's a driver to do a bit more digging, as it might indicate that the fund is taking different risks to the benchmark and might suffer if/when those risks no longer pay off (as we have seen over the last few weeks).

Audaxer

Twentytwothousand said:

kinger101 said:

A 6 percent dip in one month isn't all that unusual.  You should be invested according to your age from retirement, and attitude and capacity for risk.  I'd say more than 10 years out from retirement 80-100% equities is fine.  

What are you invested in?

All the investments are managed by the three pension companies I’m with. Would you recommend me finding out more about them and being more directive? Didn’t really occur to me that I could move funds around within the pension company’s portfolio, only that I might not have funds being managed optimally! 

Yes, you should definitely find out what investments are in your pensions, and what percentage is in each fund, and the percentage equities you hold overall. The pensions themselves are just the tax wrappers that contain the investments. If you post the funds and percentages on here, people will be able to comment on whether they consider it to be a high, medium or low risk portfolio of investments.

DT2001

borland01 said:

Great thread. I was in a similar frame of mind to the OP when I came looking for guidance, but comments above have helped me get some perspective.

Just to fill in my fact pattern a little. I have 3 pension pots (I'm only contributing into one of these at present) but my biggest percentage fall in December 21 - Jan 22 is in my largest pot, which is one I'm not contributing to. So in that sense I'm not benefitting from the fall in prices in the same way as I would if I was still making contributions.

When I look at the individual funds I'm invested in, one (60% of pot) has performed in the 1st quartile over 3, 5 and 10 years, but has dropped to 4th quartile when assessing over 1 year. I'm less concerned about that one as it might just be a short term deterioration in performance.

The second (40% of pot) has consistently been in 4th quartile over 1,3, 5 and 10 years, so I was thinking that one might be a good idea to move out of.

The performance data is coming from the fund factsheets on the Aviva website. 

Am I being too simplistic in thinking I should move out of the second fund, and if I do, where do I find the equivalent data for other funds (in a user friendly comparable format)?

Thanks for any help!

I would be doing more research into both funds. It might be that the smaller one will perform well in the coming months/years while the larger doesn’t do as well. Overall the combination might be good to see steady growth as you are well diversified.

My SIPP has been available to drawdown since I put in a lump sum (90% of contributions) almost 7 years ago (so invested in relatively less volatile funds). It was split into 3 pots and was overall down 7% nearly a year later (Greek Euro Crisis followed by Chinese intervention in the markets) however overall the pots have returned 7% p.a. on average from day 1. The 3 pots have performed differently but overall are achieving the goals I had so I have only made minor tweaks along the way.

When I was younger I invested in individual shares and overall made good returns BUT remember the mistakes I made more clearly. Try to keep an eye on the end goal.

NedS

Twentytwothousand said:

Audaxer said:

I think the OP must have a fairly high risk growth portfolio even for 100% equities, as VLS100 is only 1.6% down this year.

I shouldn’t have - aiming to retire in three to five years.  These drops were in the Aviva managed funds which they say are lower risk but should perhaps be lower still

Assuming you are planning on a 30+ year retirement, you still have a very long investment horizon so you will most likely want to remain invested at a reasonable risk level and ride out any dips. You have time on your side. If you don't assume some risk, inflation could seriously degrade your investments over the long term.

NannaH

I think that building up a cash Sipp to act as a buffer is the best thing to do, with 3-5 years of income in it.  You can then avoid selling equities in a (hopefully short lived) dip.    

 If there is a massive crash that lasts for many years then those with modest pots are probably screwed regardless, should they have the bad luck to retire before the carnage.