Is one fund enough in a SIPP?

chelseablue

My husband is self employed and pays monthly into a SIPP

He is 32 so could have another 30 years to invest 

At the moment he just has the one fund that he invests in; Vanguard FTSE Global All Cap Index 

I doubt one fund is a 'portfolio' (or is it?) should we be looking at adding more funds? Or is this one enough? 

Or is that fund totally crap and we should look at changing it to something different altogether? 

Help needed and much appreciated! 

eskbanker

That fund holds 7,180 stocks, so is already very well diversified across markets, sectors, capitalisations, etc - there is no need to add other funds for the sake of it unless there is something about that fund that he feels is inappropriate or deficient.

dunstonh

Is one fund enough in a SIPP?

If it's a multi-asset fund or global equity fund then yes.  If it's a single sector fund then no.

With larger portfolios people often look to add funds from other fund houses to reduce fund house risk but if you are not in that territory then there is no need.

Or is that fund totally crap and we should look at changing it to something different altogether? 

Its a tracker fund.  It will give you market performance.  Exactly what it is meant to do.

Alexland

I think the fund choice is fine provided he understands and accepts that he is entirely in diversified equities (no fixed income, etc) and it will occasionally crash circa 50% but if he is 30 years away from retiring then that's a few market cycles to recover. As he gets closer to starting to draw the money he may wish to reduce risk. Our SIPPs are invested in developed world trackers but we hold a smaller cap tracker in our LISAs so it's quite similar although we stopped investing in emerging markets for various reasons and the All Cap fund is a more expensive solution than I would want to pay for.

In terms of contributing directly into a SIPP has he considered if it would be more efficient to contribute first into either a workplace pension or a Lifetime ISA depending on his circumstances and options?

Lowtrawler

That Vanguard fund is fully equity based although it is geographically diversified. With over 30 years to invest, that may be appropriate for an investor if they have an appetite for risk. Vanguard provide a variety of funds including target retirement and life strategy funds which are more balanced than pure equity investment but it really all depends on your risk appetite.

The Vanguard funds are effectively trackers which allow them to keep fees low. They are a common choice for people making their own investment decisions as they are a strong brand with low charges. Many people are happy to invest in a single tracker fund if it meets their risk appetite and is suitably diversified geographically. Other people will want 3 or 4 funds and often choose different providers. The start point should be deciding an attitude to risk.

https://www.vanguardinvestor.co.uk/what-we-offer/all-products#

bostonerimus

If you are young then Vanguard FTSE Global etc is ok, but if you are older or want a little less volatility then you might want to add some cash, fixed income and bonds. A more diverse one fund portfolio solution would be something like Vanguard's multi-asset VLS80 or 60 funds as they contain a very diverse selection of equity and bond funds.

Linton

One such fund is sufficient for a portfolio especially if:

 - it is well diversified
 - you have a long time frame for your investment
 - you are prepared to accept a once in a decade temporary fall in the value of your investments, perhaps 40%-50%
 - you are continuing to contribute and so can take advantage of buying cheap units when prices are low
 - you are not motivated to spend significant time managing your portfolio.

In my view if you are in that position the Vanguard FTSE Global All Cap Index is arguably the best fund you could buy as it is more diversified than most (all?) other global share funds.  It is the one I would choose.

The one caveat is on the risk of crashes.  You will experience a major crash, probably several in the next 30 years.  It is important that you dont sell out in a panic as that will ensure the paper losses become very real.  If you cant trust yourselves to remain invested and wait for the recovery then you should look at holding something more cautious ande accerpt lower long term returns.

Albermarle

 It is important that you dont sell out in a panic

Just worth re-emphasising the importance of this point .

When financial markets are crashing and the news is all doom and gloom . it will look like their is a good chance that the  investment will keep dropping , and dropping.....

The fear of losing even more can mean people sell their investments . This is the worst thing you ( or he ) could do . You have to hang on and wait for the recovery, however long it takes . 

If you think you can live with this , then the investment he has is fine and should prove good in the long term 

Bravepants

Linton said:

One such fund is sufficient for a portfolio especially if:

 - it is well diversified
 - you have a long time frame for your investment
 - you are prepared to accept a once in a decade temporary fall in the value of your investments, perhaps 40%-50%
 - you are continuing to contribute and so can take advantage of buying cheap units when prices are low
 - you are not motivated to spend significant time managing your portfolio.

In my view if you are in that position the Vanguard FTSE Global All Cap Index is arguably the best fund you could buy as it is more diversified than most (all?) other global share funds.  It is the one I would choose.

The one caveat is on the risk of crashes.  You will experience a major crash, probably several in the next 30 years.  It is important that you dont sell out in a panic as that will ensure the paper losses become very real.  If you cant trust yourselves to remain invested and wait for the recovery then you should look at holding something more cautious ande accerpt lower long term returns.

I second this post from Linton. If I had learned about investing 30 years ago, and this fund had been available, I would have just used this fund. I currently use it in my ISA, along with VLS 60 because I'm 30 years down the line.