Value of pension is freaking me out

michaels

RPI inflation over the last 12 months is 7.5% so make sure you look at returns in real terms or you are fooling yourself.

borland01

DT2001 said:

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.

I'm 60% in Baillie Gifford International FP and 4)% in Blackrock (50:50) Global Equity Index Tracker FP. In the Aviva factsheets they are marked as 7 and 6 (on a 7 point risk rating scale) and I am around 15 years out from retirement. Like many I'm happy to take the upside but the downside risk is less palatable :-)

 Looking at the two investments, it's the Baillie Gifford one that's creating most of the drop (13% down since end November).

dunstonh

borland01 said:

DT2001 said:

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.

I'm 60% in Baillie Gifford International FP and 4)% in Blackrock (50:50) Global Equity Index Tracker FP. In the Aviva factsheets they are marked as 7 and 6 (on a 7 point risk rating scale) and I am around 15 years out from retirement. Like many I'm happy to take the upside but the downside risk is less palatable :-)

 Looking at the two investments, it's the Baillie Gifford one that's creating most of the drop (13% down since end November).

That would be expected.  Most BG funds are higher risk than their peers in the same sector.  Great when going up but not when going down.

GSP

dunstonh said:

borland01 said:o

DT2001 said:

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.

I'm 60% in Baillie Gifford International FP and 4)% in Blackrock (50:50) Global Equity Index Tracker FP. In the Aviva factsheets they are marked as 7 and 6 (on a 7 point risk rating scale) and I am around 15 years out from retirement. Like many I'm happy to take the upside but the downside risk is less palatable :-)

 Looking at the two investments, it's the Baillie Gifford one that's creating most of the drop (13% down since end November).

That would be expected.  Most BG funds are higher risk than their peers in the same sector.  Great when going up but not when going down.

I imagine like most of the advice usually on here is for people in drawdown with BG funds is to sit tight?
Is it possible some investments never recover?
In that case, when would alarm bells start ringing to warn people to get out of that investment before they lost everything?
Or wouldn’t they sound?

dunstonh

I imagine like most of the advice usually on here is for people in drawdown with BG funds is to sit tight?

Nothing has changed.    You look back at most BG funds and you find they have these periods of a year or two of underperformance.  Reasons vary but it is largely a consequence of the areas they invest in going out of favour for a couple of years.

Is it possible some investments never recover?

Yes.

In that case, when would alarm bells start ringing to warn people to get out of that investment before they lost everything?

You are unlikely to lose everything.    Techs did drop 90% just over 20 years ago.    However, the wider market fell 43% or thereabouts.   Most of those heavy in tech never recovered as time ran out for them or they only did more than a decade later.

You rarely get any warning of a drop and by the time you get worried, it's too late.   This is why you diversify.  

MarkCarnage

I think it's important to understand that the BG funds are not the same as out and out 'tech' sector funds. Long duration growth, absolutely, disruptive business models, definitely, companies using innovative technology, most definitely, but very often not the 'tech' providers themselves, at least in the narrow IT sector definition. 
I'd be more worried about Chinese political influence on some BG holdings than tech......that's what's worrying them. 
There is also a bit less concentration now in a fund like Scottish Mortgage than there was a year or so ago.
However, there philosophy remains based on identifying a few really big winners, where the share price will move factorially. That will also mean some big failures, but if out of 10-20 stocks they identify 1 or 2 of the next Amazon, Google or similar, have another couple of moderate successes, it probably doesn't matter what the rest do. When bought, each holding is usually 1% or so of the fund, sometimes a little more, sometimes less.....the 5-10% holdings come from that, and aren't bought at that size.  

I'm not surprised that they've taken a bit of a hit:

- for the investment trusts, premiums to NAV have moved to discounts
- all long duration growth has taken a hit due to discount rates rising
- BG said themselves a year or so ago that COVID had compressed several years expected gains into 6 months....or something similar. 

Add to that, there has been a lot of quite hot money going in there, some of which is probably heading out again.....from those who  shouldn't have been there in the first place. These things are cyclical, as others have said. 

GSP

dunstonh said:

I imagine like most of the advice usually on here is for people in drawdown with BG funds is to sit tight?

Nothing has changed.    You look back at most BG funds and you find they have these periods of a year or two of underperformance.  Reasons very but it is largely a consequence of the areas they invest in going out of favour for a couple of years.

Is it possible some investments never recover?

Yes.

In that case, when would alarm bells start ringing to warn people to get out of that investment before they lost everything?

You are unlikely to lose everything.    Techs did drop 90% just over 20 years ago.    However, the wider market fell 43% or thereabouts.   Most of those heavy in tech never recovered as time ran out for them or they only did more than a decade later.

You rarely get any warning of a drop and by the time you get worried, it's too late.   This is why you diversify.  

Thanks dunstonh.

GSP

MarkCarnage said:

I think it's important to understand that the BG funds are not the same as out and out 'tech' sector funds. Long duration growth, absolutely, disruptive business models, definitely, companies using innovative technology, most definitely, but very often not the 'tech' providers themselves, at least in the narrow IT sector definition. 
I'd be more worried about Chinese political influence on some BG holdings than tech......that's what's worrying them. 
There is also a bit less concentration now in a fund like Scottish Mortgage than there was a year or so ago.
However, there philosophy remains based on identifying a few really big winners, where the share price will move factorially. That will also mean some big failures, but if out of 10-20 stocks they identify 1 or 2 of the next Amazon, Google or similar, have another couple of moderate successes, it probably doesn't matter what the rest do. When bought, each holding is usually 1% or so of the fund, sometimes a little more, sometimes less.....the 5-10% holdings come from that, and aren't bought at that size.  

I'm not surprised that they've taken a bit of a hit:

- for the investment trusts, premiums to NAV have moved to discounts
- all long duration growth has taken a hit due to discount rates rising
- BG said themselves a year or so ago that COVID had compressed several years expected gains into 6 months....or something similar. 

Add to that, there has been a lot of quite hot money going in there, some of which is probably heading out again.....from those who  shouldn't have been there in the first place. These things are cyclical, as others have said. 

Being cyclical, when annual reviews come round should these likely worse performing investments in a portfolio be replaced? Or would you stick with them until they recover somewhat?

BritishInvestor

NannaH said:

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.  

3-5 years might not be sufficient if you are taking on risks that are different to broad market exposure.

MarkCarnage

GSP said:

MarkCarnage said:

I think it's important to understand that the BG funds are not the same as out and out 'tech' sector funds. Long duration growth, absolutely, disruptive business models, definitely, companies using innovative technology, most definitely, but very often not the 'tech' providers themselves, at least in the narrow IT sector definition. 
I'd be more worried about Chinese political influence on some BG holdings than tech......that's what's worrying them. 
There is also a bit less concentration now in a fund like Scottish Mortgage than there was a year or so ago.
However, there philosophy remains based on identifying a few really big winners, where the share price will move factorially. That will also mean some big failures, but if out of 10-20 stocks they identify 1 or 2 of the next Amazon, Google or similar, have another couple of moderate successes, it probably doesn't matter what the rest do. When bought, each holding is usually 1% or so of the fund, sometimes a little more, sometimes less.....the 5-10% holdings come from that, and aren't bought at that size.  

I'm not surprised that they've taken a bit of a hit:

- for the investment trusts, premiums to NAV have moved to discounts
- all long duration growth has taken a hit due to discount rates rising
- BG said themselves a year or so ago that COVID had compressed several years expected gains into 6 months....or something similar. 

Add to that, there has been a lot of quite hot money going in there, some of which is probably heading out again.....from those who  shouldn't have been there in the first place. These things are cyclical, as others have said. 

Being cyclical, when annual reviews come round should these likely worse performing investments in a portfolio be replaced? Or would you stick with them until they recover somewhat?

In general no.....for several reasons. 

How do you 'know' when something is a 'likely' worse performing investment. That implies an ability to 'market time' which is just not plausible. Investors do not have a good track record at this. Despite what some claim. 

Also, a portfolio should be constructed to hold different investment styles appropriate for the investor. This might just be all passive/index tracking for someone who wants low cost and doesn't have time and/or knowledge to assess each holding.

Thirdly, the costs of trading in and out of holdings should be taken into account.

What is sensible is to remove a holding which is no longer appropriate for the investor's own circumstances, or where you believe that the manager is no longer doing an acceptable job within the investment style they use, or that they have changed that style. Also, some rebalancing to adjust the size of holdings might be appropriate, though don't overdo that.....see comments on costs of trading.