Should I change my Aegon Plan Investment? FPS Passive equity

cameroon95

Hi All,

I have been paying into my Aegon plan as below for the past few years. Can anyone advise if this is a good plan to be on ? 
I believe I have options for my plan but this was the default one I started on , as with a lot of pensions at the moment my fund is down around 15-17%.

I understand that this is due to market conditions and this may change in future. Just looking for views on a fund of this type in general as I have started looking into it and this seems to be a high-risk fund?

Albermarle

Yes seems a high risk fund for a default fund. Normally they are in the 50 to 75% equity area. Did you maybe at some point indicate a high risk tolerance, and/or a willingness to go for max growth ?

On the other hand these types of funds have done very well over the last 10 years or so, despite the recent drop off. Maybe worth looking back at the longer term performance.
If you are still some way from retirement, then probably not a bad choice if you can live with the inevitable ups and downs.

cameroon95

Im 37 at the moment so still a few years yet , looking to reture at around 57 if I can manage it .

Is it easy enough to look at past performance on these funds? Im having difficulty finding information on my pension portal

MallyGirl

cameroon95 said:

Im 37 at the moment so still a few years yet , looking to reture at around 57 if I can manage it .

Is it easy enough to look at past performance on these funds? Im having difficulty finding information on my pension portal

I tried to look them up and couldn't find those names - there must be an underlying publicly quoted fund name

dunstonh

Is it easy enough to look at past performance on these funds?

What will you learn by looking at past performance when the underling funds are trackers?

The funds you have are the pension scheme in-house names for the blending of other funds. For example, the FPS Passive World Multi-Factor Equity Tracker Fund is actually invested 100% into ACS World Multifactor Equity Tracker Fund  (ISIN GB00BF1KF532).  The FPS Passive World Equity Fund is 90% in Aegon BlackRock MSCI Currency Hedged World Index (BLK) Class N and 10% into 10% Aegon BlackRock Emerging Markets Equity Index (BLK) Class N

The scheme has lifestyle risk reduction as default.  So, in time, risk will reduce as you get closer to retirement but there are some configurations you can do.   There are multiple configurations available on the lifestyling as well as the ability to self select from a small range of funds.

Can anyone advise if this is a good plan to be on ? The FPS pension is bespoke for that employer. It isn't a retail Aegon pension.

and this seems to be a high-risk fund?High risk but ideal for someone contributing monthly into the pension who is 30 years away from retirement. High risk on the conventional risk scale but not silly high risk.   With 30 years or so until retirement, lower investment risk could actually be classed as higher overall risk as investment risk is not the only risk you are looking at.  You have shortfall risk and inflation risk.

cameroon95

Thank you so much fo the information.

When you say "what wll I learn because the underlying funds are trackers" , can you explain furthur? What exactly is being tracked?

JohnWinder

Using that useful information from dunston you can search for the funds which make up your account and thus find the index that is being tracked as well as performance data.
Yours are funds of stocks (shares). An index is a representative collection of stocks which is used to measure a part of the economy that the collection represents. Your funds follow indexes that approximately represent all the major stocks in much of the world, which is a safe way to invest in stocks since they hold many different stocks and thus reduce the risk to you if any one or some of them fail badly. Of course, if they all/most suffer as is currently happening, you and I have nowhere to hide.
One use for looking at the performance of your funds is to compare it with the index each is tracking. You’d like them to follow the index fairly closely, otherwise it’s not doing its job of following the index.
I’d say your funds are quite suitable for stock (share) investing, and certainly for long term investing. There are hundreds or thousands of similar funds on offer to investors, so it would be tedious to go picking through all of them to find something only a tiny bit better; and it would only be better in theory, not practice as we won’t know which is better in practice until another 30 years pass.
If you do go looking at performance, consider this:
Past returns are always interesting, and very informative about what happened in the past - how well did my fund do; how often did it scare me; what’s the worst it was capable of; should I have chosen something different?
But I don’t think it has anything reliable to tell us about the future, and particularly if we’re comparing different funds. Twenty years of returns of two nearly identical funds would probably give me some confidence in saying how they would do compared to each other (not in absolute terms) over the next twenty years; but not 20 years of returns of two quite different funds because they might be affected differently by future economic conditions.
Short periods of returns give very unreliable indications of future returns, and the problem with long periods of returns as reliable indicators of what future returns might be, is that there are very few samples of long periods to calculate averages etc from. Since 1930 there have only been 3 thirty year separate periods. No one trust an average of three, especially when one had most of the great depression in it.

Pat38493

JohnWinder said:

. Since 1930 there have only been 3 thirty year separate periods. No one trust an average of three, especially when one had most of the great depression in it.

Can't you can also compare rolling sequences of periods of 30 years, although of course they will contain some of the same years within them?  So for example 1970 to 2000, 1971 to 2001 etc.  You could even compare any random date with the following 30 years ending at 1992 I guess.

JohnWinder

Of course, yes, and it would tell you something. But they won’t be independent of each other, which would affect your interpretation.

Albermarle

cameroon95 said:

Thank you so much fo the information.

When you say "what wll I learn because the underlying funds are trackers" , can you explain furthur? What exactly is being tracked?

In simple terms there are different ways to invest in equities ( means shares ) 
You can buy individual company shares . This seen as very high risk.
You can buy funds that contain multiple different company shares, chosen by the manager of fund. Less risky but you are relying on the manager having good judgement + these funds can have high charges.
You can buy funds that passively track a stock market index. For example you can buy a fund that tracks the FTSE 100, it just simply follows the published FTSE 100 index up and down. These have become popular in recent years as they are cheap and simple. These are called tracker funds and your pension funds just contain these types of funds in a certain blend. 

As the funds are a lifestyle option, then when you get nearer retirement, the % of equities will start to reduce and be replaced mainly by bonds, which normally are less volatile. How soon this happens will be defined by the indicated retirement age your pension provider has for you. You can change this normally on their website.

Lifestyling takes different forms as Dunstonh explained and is not always suitable for everybody. No need to worry about it now but maybe worth learning more about these subjects over the next few years