Looking to start a pension - advice needed

bpk101

So in terms of arriving at some decisions, i think what i’d like to kick it off with is a simple ready-made portfolio that i can choose according to risk (but for now, doesn’t de-risk automatically). 

The LifeStrategy fund sounds like a good option, but in terms of due-diligence, i’d like to compare it with other products that might offer a similar thing. Knowing what to search for to find comparable products is proving difficult though and i’m not sure whether i’m comparing apples with oranges.

For example… 

Vanguards Lifestrategy ready-made-portfolios seem to be made up entirely of index-tracking funds. Index funds i understand from everything i've read are a good low-cost passive investing strategy for the novice investor like me, so all good. 

However, Hargreaves Lansdown and AJ Bell also offer ready-made portfolio products based on risk-level, but as far as i can tell from digging through the portfolio data, seem to made up of one or two index funds but a lot of other stuff.

Are the 3 products comparable at all?

Are they in fact all passive investing products built around index funds and i’m simply misinterpreting something?

Does it indeed matter if they are or are not made up entirely of index funds? 

Ultimately... how can i seek out comparable products to the Life Strategy product (i.e. a low-cost, ready-made, risk-aligned, SIPP-ready portfolio) that might be suitable for my pension opening plans?

And what criteria should i be basing my comparisons on when i do find them to arrive at a solid decision?

bpk101

As an aside question...

Whilst the Vanguard Lifestrategy products are made up of multiple index funds, my son's JISA is only invested in a single index fund (ones that aims to track the performance of the FTSE Developed All Cap Choice Index).

Does it matter?
How does tracking a single index vs. multiple indexes effect performance?

dunstonh

However, Hargreaves Lansdown and AJ Bell also offer ready-made portfolio products based on risk-level, but as far as i can tell from digging through the portfolio data, seem to made up of one or two index funds but a lot of other stuff.
Are the 3 products comparable at all?
Are they in fact all passive investing products built around index funds and i’m simply misinterpreting something?

The VLS funds are fettered fund of funds.  So, comparing them with other fund of funds is reasonable.   Although the HL and AJBell ones are unfettered and are not 100% underlying passives.  Also, the cost of those ones is greater than using many IFAs.  So, it largely defeats the objective of many DIY investors to save money compared to using an adviser.

Does it indeed matter if they are or are not made up entirely of index funds? 

No. That is just a management decision.

Ultimately... how can i seek out comparable products to the Life Strategy product (i.e. a low-cost, ready-made, risk-aligned, SIPP-ready portfolio) that might be suitable for my pension opening plans?

Look at the Volatility managed sector.  Or the 0-35% mixed equity sector (or 20-60%... and 40-85% depending on your risk level).  Most should be in those sectors.

And what criteria should i be basing my comparisons on when i do find them to arrive at a solid decision?

What their management decisions are and how they invest.  For example, VLS have made active decisions to go heavy in UK and have a rigid equity content. That means it cannot be volatility targetted.   If you don't care about that then it should be on your list.  If you want a volatility targetted fund of funds then it should be off your list.

Albermarle

Ultimately... how can i seek out comparable products to the Life Strategy product (i.e. a low-cost, ready-made, risk-aligned, SIPP-ready portfolio) that might be suitable for my pension opening plans?And what criteria should i be basing my comparisons on when i do find them to arrive at a solid decision?

I think this is what you are looking for .

Fund-of-funds: the rivals - Monevator

Thrugelmir

bpk101 said:

I'm a freelancer / sole-trader with a relatively stable and consistent income and i'd be looking to contribute £500 a month to begin with (£625 including the added 20% relief at source). In terms of my retirement plan i'd be looking to retire at 65 and start drawing down income from the pension when I do. 

I've done a fair bit of reading and research and a lot of it pointed to Vanguard Target Retirement Funds as being a no-brainer for people like me who want a low cost, easy to set up option that manages the investments for me. 

However, an IFA i've been chatting to recently as part of a free introductory consultation has advised me against TRF's due to them being too regimented (automatically changing asset allocation - possibly at a sub-optimal time) and de-risking too early.

How long before you plan to draw the benefits?  Bonds will again form a fundamental part of investment  portfolios in the years ahead. What the position is now is not always the basis for investing for the future. Era's all draw eventually to a close. 

It's a safe option to consider while you find your feet. 

QrizB

Albermarle said:

Ultimately... how can i seek out comparable products to the Life Strategy product (i.e. a low-cost, ready-made, risk-aligned, SIPP-ready portfolio) that might be suitable for my pension opening plans?And what criteria should i be basing my comparisons on when i do find them to arrive at a solid decision?

I think this is what you are looking for .

Fund-of-funds: the rivals - Monevator

I noticed that the relative performance chart on that Monevator page is from 2019. For my own information I recreated it, in part, to see how those funds are doing now. I'm not smart enough to give you a link to the chart but here's a screenshot:

bpk101

Albermarle said:

Ultimately... how can i seek out comparable products to the Life Strategy product (i.e. a low-cost, ready-made, risk-aligned, SIPP-ready portfolio) that might be suitable for my pension opening plans?And what criteria should i be basing my comparisons on when i do find them to arrive at a solid decision?

I think this is what you are looking for .

Fund-of-funds: the rivals - Monevator

Would you look at that, like it was written for me! 

And super useful to now know a ‘fund of funds’ is what I’m searching for. Multi-asset, one-decision, ready-made, all-in-one, invest-and-forget… the terminology alone was killing me. 

Albermarle

QrizB said:

Albermarle said:

Ultimately... how can i seek out comparable products to the Life Strategy product (i.e. a low-cost, ready-made, risk-aligned, SIPP-ready portfolio) that might be suitable for my pension opening plans?And what criteria should i be basing my comparisons on when i do find them to arrive at a solid decision?

I think this is what you are looking for .

Fund-of-funds: the rivals - Monevator

I noticed that the relative performance chart on that Monevator page is from 2019. For my own information I recreated it, in part, to see how those funds are doing now. I'm not smart enough to give you a link to the chart but here's a screenshot:

That's useful . Just a couple of points . I know the Fidelity multi asset funds changed their strategy a couple of years ago , From having a moving equity % ( like the HSBC funds ) to a fixed % like the Vanguard funds ( but without the high UK %) 
Also the newer Blackrock range of MyMap funds are not included - although as their history is still short it is difficult to compare them. Also there is no direct equivalent to the above - it would be somewhere between mymap 4 and mymap5

NSG666

bpk101 said:

Albermarle said:

Ultimately... how can i seek out comparable products to the Life Strategy product (i.e. a low-cost, ready-made, risk-aligned, SIPP-ready portfolio) that might be suitable for my pension opening plans?And what criteria should i be basing my comparisons on when i do find them to arrive at a solid decision?

I think this is what you are looking for .

Fund-of-funds: the rivals - Monevator

Would you look at that, like it was written for me! 

And super useful to now know a ‘fund of funds’ is what I’m searching for. Multi-asset, one-decision, ready-made, all-in-one, invest-and-forget… the terminology alone was killing me. 

See how the more you look the more difficult it can become? You started off thinking VG TRF was the way forward then VG LS but now presented with a choice of several and a decision on which one(s) to choose. All the time the clock is ticking.

That's an observation not a criticism as I'm in a similar boat but trying to decide where to switch my existing funds to simplify them. As has been said several times in this thread though, in your case you can pick one and bang some money in it now and move it later if desired.

bpk101

NSG666 said:

You started off thinking VG TRF was the way forward then VG LS but now presented with a choice of several and a decision on which one(s) to choose. 

That's an observation not a criticism...

Indeed, the more you pick at it the more it unravels!