Pension Fund disaster vs benchmark in last 12 months

ericlered7

Ok so I have a pension with Royal London.

Up until about 18 months ago, the equity portion was invested in "RLP Global Managed" fund, but whilst reviewing the risk profile of my policy, I also switched the equity portion to the fund below.... (before you ask, I did not take professional advice in doing this, which was obviously a mistake on my part!)

The majority of my contributions are now invested in the equity fund "RLP Global Blend Core Plus (RLP Global Growth)"

I have seen the monthly fund performance document from Royal London, and it makes sobering reading for the 12 months from 31/8/21 to 31/8/22

If I'm reading it correctly, the equity fund has gone down in value in this period by 17.89%, much worse than this however, it says that the benchmark it is measured against has only gone down by 1.31% I understand that this is only over a short time frame, and in the years before this the fund had performed much closer to it's benchmark.

From another document sourced from fundslibrary it appears that the majority of the loss in value for this 12 month period happened in January & February 2022.

First of all how can an actively managed fund fare so badly, against it's own benchmark, in such a short space of time? Secondly, apart from speaking to an IFA to review my pension investments, is there anything else I can do about the fund's abject failure in this last year? Do fund managers / providers have any accountability?

SarahB16

ericlered7 said:

If I'm reading it correctly, the equity fund has gone down in value in this period by 17.89%, much worse than this however, it says that the benchmark it is measured against has only gone down by 1.31% I understand that this is only over a short time frame, and in the years before this the fund had performed much closer to it's benchmark.

What are the ISIN numbers of the funds you are invested in please and what is the benchmark index of each of the funds you quote,
 i.e.    ISIN 123456789    Benchmark index name 
          ISIN 987654321    Benchmark index name 

Albermarle

First of all how can an actively managed fund fare so badly, against it's own benchmark, in such a short space of time?

Benchmarks are arbitary figures but you are right for a 100% equities fund the performance is poor. Maybe it is the relatively high UK %, or maybe they have hedged the US% or maybe just made some bad choices.

Do fund managers / providers have any accountability?

Only to act within their remit and legal requirements .

If it makes you feel better, maybe peoples pension funds are down 'double figures' so in that respect not so unusual. Not many would be down only a couple of percent.

ericlered7

SarahB16 said:

ericlered7 said:

If I'm reading it correctly, the equity fund has gone down in value in this period by 17.89%, much worse than this however, it says that the benchmark it is measured against has only gone down by 1.31% I understand that this is only over a short time frame, and in the years before this the fund had performed much closer to it's benchmark.

What are the ISIN numbers of the funds you are invested in please and what is the benchmark index of each of the funds you quote,
 i.e.    ISIN 123456789    Benchmark index name 
          ISIN 987654321    Benchmark index name 

Hi, the ISIN of the fund is GB0031681876

The benchmark is a composite of the following - 55% FTSE World, 35% FTSE All Share Index, 10% MSCI Emerging Markets
ESG Leaders

ericlered7

Albermarle said:

First of all how can an actively managed fund fare so badly, against it's own benchmark, in such a short space of time?

Benchmarks are arbitary figures but you are right for a 100% equities fund the performance is poor. Maybe it is the relatively high UK %, or maybe they have hedged the US% or maybe just made some bad choices.

Do fund managers / providers have any accountability?

Only to act within their remit and legal requirements .

If it makes you feel better, maybe peoples pension funds are down 'double figures' so in that respect not so unusual. Not many would be down only a couple of percent.

To be honest I'm not surprised at the downturn as such, more the downturn as compared to it's benchmark.

[Deleted User]

Looks like a filthy expensive fund which holds racy funds and  does not do any own stock picking. 

Ironic that its called “Alpha” (outperformance) given that its underperformed for all available periods of time, including 10 years.  Morningstar rating: 1 star (bad).  If you are going yo pick active funds (which I don’t recommend), Morningstar is a really good resource. 

Of course the fund could outperform next year but it won’t take away its fundamental problems, such as high cost and high risk profile. 

I am not a fan of RL. All the funds that I looked at have misleading titles. RL seems to play the role of “another management layer lying under the stream of money”. 

https://www.morningstar.co.uk/uk/snapshot/snapshot.aspx?id=VAUSA05TBZ&InvestmentType=SA

ericlered7

Deleted_User said:

Looks like a filthy expensive fund which holds racy funds and  does not do any own stock picking. 

Ironic that its called “Alpha” (outperformance) given that its underperformed for all available periods of time, including 10 years.  Morningstar rating: 1 star (bad).  If you are going yo pick active funds (which I don’t recommend), Morningstar is a really good resource. 

Of course the fund could outperform next year but it won’t take away its fundamental problems, such as high cost and high risk profile. 

I am not a fan of RL. All the funds that I looked at have misleading titles. RL seems to play the role of “another management layer lying under the stream of money”. 

https://www.morningstar.co.uk/uk/snapshot/snapshot.aspx?id=VAUSA05TBZ&InvestmentType=SA

Thanks. Ideally I'd like to ditch it and remove the high cost immediately, but now it's lost so much in the last year I'm reluctant to crystalise the losses until it can recover. But that may be total wishful thinking.

[Deleted User]

Are you sure the ISIN number is correct? FT and Morningstar have a different title for this fund.  

Regardless, you need to have a strategy. The logic for “crystallizing losses” is true in a sense that market trends up and you want to stay in the market during downturns.  Its not true that you have to stick to poor investment choices which consistently underperform.

I would do some reading, starting with the short and simple John Edwards book.  “Random Walk Down the Wall Street” is awesome.  Bernstein’s books on risk and asset allocation are great. 

If you don’t want to read then you still need to confirm that 100% stocks is the right choice (are you quite young?) Ifso I would put it it all with a large mainstream provider holding diversified international stocks at low costs. HSBC, Vanguard and a few others offer good options.  

jim8888

Whatever the performance, you'll be paying the fund manager a fee for it.

ericlered7

Deleted_User said:

Are you sure the ISIN number is correct? FT and Morningstar have a different title for this fund.  

Regardless, you need to have a strategy. The logic for “crystallizing losses” is true in a sense that market trends up and you want to stay in the market during downturns.  Its not true that you have to stick to poor investment choices which consistently underperform.

I would do some reading, starting with the short and simple John Edwards book.  “Random Walk Down the Wall Street” is awesome.  Bernstein’s books on risk and asset allocation are great. 

If you don’t want to read then you still need to confirm that 100% stocks is the right choice (are you quite young?) Ifso I would put it it all with a large mainstream provider holding diversified international stocks at low costs. HSBC, Vanguard and a few others offer good options.  

The ISIN comes from "fundslibrary" here https://www.fundslibrary.co.uk/Clients/RoyalLondon/?id=4a9e38a1-e55f-46c9-829c-7762364eadc4

Morningstar has a different name for the fund but the price of 277.7 is the same. About 8p less than 2 days ago!!

My policy is 79% invested in this equity fund, so is really dragging it down.

ericlered7

jim8888 said:

Whatever the performance, you'll be paying the fund manager a fee for it.

That's what makes it even worse!!