Levels of Investments to consider bigger portfolios

SpeedSouth

Hi,
I realise there will be no black and white answer on this, but you see a lot of threads stating that smaller pots you may as well just leave it all in a VLS type fund or a global tracker.

At present my ISAs are still very much in this category, but my workplace pension is sitting at £250K now, and it has underperformed to a simple global tracker.  I had assumed given it was "managed" this would be safer than me messing with it.  I've got at least 17 years till I can take it and will be putting in the max I can for the foreseeable so that's a lot of years to underperform.

I realise past history will not repeat etc, but maybe I should be looking to invest it differently now.  Is £250K suitable for a blend of trackers?

InvesterJones

The main concern is fees - if you pay a set fee for a transaction or to hold a fund then it makes sense to pool the resource and do transactions on a single fund which itself contains the diversity you're looking for. Once you get a larger investment then if you're paying set fees they only account for small proportion of the fund so you can afford to buy a range of individually less diverse funds.

But size of investment shouldn't really have any bearing on what you invest in. If you think a global tracker is the best option for your investment then it remains so, regardless.

One thing though - if your pension is at £250k now, and you're planning on putting the maximum in for 17 years, be careful of hitting the maximum amount you can hold in a pension tax-free.

Albermarle

and it has underperformed to a simple global tracker

Over what sort of time scale are you measuring this? and at what risk level is your managed fund?

In these situations you have to be careful not be comparing apples with pears and/or over too short a time scale.

El_Torro

Opinions vary on this but I'm not sure there is a magic number. If a global tracker (or single multi asset fund) works for you at £10k I don't really see why it wouldn't work at £250k, or £500k, or larger. Sure, you can add commodities, or smaller companies, or property, or something else, but your portfolio may not magically perform better as a result. 

One thing to note about your workplace pension is that it may have a fair bit invested in bonds. Especially if you're in the default fund. This might be why it has not performed as well as a global tracker (though as Albermarle states it depends what time period you're looking at, and also future performance may not be the same as past performance). 

Many workplace pensions do not offer global trackers that are 100% shares. That's OK though, you can always transfer some of the pension to a SIPP with more options. Just be careful not to transfer the whole pension, or you might find that this removes you from your employer's pension scheme. 

bostonerimus

El_Torro said:

Opinions vary on this but I'm not sure there is a magic number. If a global tracker (or single multi asset fund) works for you at £10k I don't really see why it wouldn't work at £250k, or £500k, or larger. Sure, you can add commodities, or smaller companies, or property, or something else, but your portfolio may not magically perform better as a result. 

I agree, I don't see a size limit on using trackers. My mid 7 figure portfolio is mostly in a domestic equity index, an international equity index and a bond biased multi-asset fund. I have diversifiers like rental property, a DB pension, a very old deferred annuity and of course state pension that are not directly linked to markets, but I don't worry at all about having "large" sums in trackers.

SpeedSouth

Albermarle said:

and it has underperformed to a simple global tracker

Over what sort of time scale are you measuring this? and at what risk level is your managed fund?

In these situations you have to be careful not be comparing apples with pears and/or over too short a time scale.

It was over a 5 year period using H&L website to compare the current data.  Admittedly I have checked it previously (last October) and over a 5 year period my thinking is it was much closer than it is now.

With the workplace pension, it was switched to "high risk" nearly 90-92%% equities when I started (2016) given my timeframe.  

Again I realise past performance is no indicator but they do appear to have trackers available I could use as well.

More reading I suspect. At ISA level the swings are not huge, at what my pension will hopefully get to the losses/gains are larger, so so far I've not be confident enough to DIY it solely.