Pension Fund disaster vs benchmark in last 12 months

Linton

ericlered7 said:

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.

There is certainly some confusion around.  The list of investments given by your reference is a list of individual shares, whereas the main investments for the same ISIN code provided by Morningstar are all funds.

[Deleted User]

Linton said:

ericlered7 said:

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.

There is certainly some confusion around.  The list of investments given by your reference is a list of individual shares, whereas the main investments for the same ISIN code provided by Morningstar are all funds.

Not really.   The prospectus states “ The fund invests in unit linked collective investment funds with an active management style which invest in UK and Overseas Equities. “  It lists individual shares because it looked under the bonnet of the funds which it buys.  

[Deleted User]

ericlered7 said:

jim8888 said:

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

That's what makes it even worse!!

The posted expense ratio, assuming thats what you pay, is way too high. Personally I wouldn’t consider anything over 0.5%.  Charging over 1% in 2022 = robbery. 

Linton

Deleted_User said:

Linton said:

ericlered7 said:

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.

There is certainly some confusion around.  The list of investments given by your reference is a list of individual shares, whereas the main investments for the same ISIN code provided by Morningstar are all funds.

Not really.   The prospectus states “ The fund invests in unit linked collective investment funds with an active management style which invest in UK and Overseas Equities. “  It lists individual shares because it looked under the bonnet of the funds which it buys.  

Thanks, so I will resurrect my original comment based on the Morningstar data:

I have looked at morningstar data to understand why the fund has performed so badly.  3 factors strike me:
1) Very high UK allocation at 36%
2) High small companies allocation - more than 50% medium and small
3) use of higher risk growth funds - in particular Baillie Gifford American and Baillie Gifford UK Equity Alpha

So it looks somewhat of a strange niche fund that chases returns.  Its recent performance appears to be due to it investing in sectors that perform badly in difficult economic conditions rather than poor management actions. 

The performance against the benchmark is pretty irrelevent because it is a very different fund.  It is not unusual for a fund to be very different to its stated benchmark. Perhaps because the world of benchmarks is much less varied than that of funds.

Oddly Morningstar calls the fund "RLP/Close Teams Global Alpha 2% Pension Fund" but the ISIN number is the same.

dunstonh

Remember that RL pricing is based on default minus fund-based discounts.  it doesnt take much money at all to get a 0.6% discount.  Plus, there is no platform charge.

[Deleted User]

Linton said:

Deleted_User said:

Linton said:

ericlered7 said:

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.

There is certainly some confusion around.  The list of investments given by your reference is a list of individual shares, whereas the main investments for the same ISIN code provided by Morningstar are all funds.

Not really.   The prospectus states “ The fund invests in unit linked collective investment funds with an active management style which invest in UK and Overseas Equities. “  It lists individual shares because it looked under the bonnet of the funds which it buys.  

Thanks, so I will resurrect my original comment based on the Morningstar data:

I have looked at morningstar data to understand why the fund has performed so badly.  3 factors strike me:
1) Very high UK allocation at 36%
2) High small companies allocation - more than 50% medium and small
3) use of higher risk growth funds - in particular Baillie Gifford American and Baillie Gifford UK Equity Alpha

So it looks somewhat of a strange niche fund that chases returns.  Its recent performance appears to be due to it investing in sectors that perform badly in difficult economic conditions rather than poor management actions. 

The performance against the benchmark is pretty irrelevent because it is a very different fund.  It is not unusual for a fund to be very different to its stated benchmark. Perhaps because the world of benchmarks is much less varied than that of funds.

Oddly Morningstar calls the fund "RLP/Close Teams Global Alpha 2% Pension Fund" but the ISIN number is the same.

UK allocation won’t cause underperformance vs the benchmark.  The benchmark is 35% UK. 

It is a fund of funds investing in racy growth assets.  Growth has underperformed, which would be expected in this cycle (or over long periods of time).  

Apart from high cost, my beef (as with all RL funds) is lack of transparency. They are calling the fund “Global Core Plus”. Thats designed to mislead. 

Also there is this strangely assertive and downright weird claim!: 

 “ the fund's annualised performance will track within a range of 1% to 5% of a composite benchmark of the FTSE All Share, FTSE World Index and MSCI EM ESG Leaders measured on a 3 year rolling basis.”

They went out and bought a bunch of high beta funds. That concoction would not be expected to track the indices they listed over any 3 year period.  Nonsense.  

ericlered7

Deleted_User said:

ericlered7 said:

jim8888 said:

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

That's what makes it even worse!!

The posted expense ratio, assuming thats what you pay, is way too high. Personally I wouldn’t consider anything over 0.5%.  Charging over 1% in 2022 = robbery. 

I think it the admin charge is 0.72% but then it's an extra 0.77% charge for being invested in the equity fund that's performing so badly in 2022. So yes very expensive.

I assume the only way I can reduce these charges is by switching away from the equity fund and / or scheme, which would be a wrench as it crystallises the loss in value. Stick or twist!

dunstonh

I think it the admin charge is 0.72% but then it's an extra 0.77% charge for being invested in the equity fund that's performing so badly in 2022. So yes very expensive.

Normally, RL funds are 1% default minus any fund based discounts and, if an employer scheme, what level of discount they have obtained.   External funds have a loading onto that 1%.   Factsheets show the figures without discounts.

ericlered7

dunstonh said:

I think it the admin charge is 0.72% but then it's an extra 0.77% charge for being invested in the equity fund that's performing so badly in 2022. So yes very expensive.

Normally, RL funds are 1% default minus any fund based discounts and, if an employer scheme, what level of discount they have obtained.   External funds have a loading onto that 1%.   Factsheets show the figures without discounts.

Yes the 0.72% charge is discounted from the standard 1% Not too unhappy with this, but sure wish I hadn't switched the equity portion, as the Global Blend Core plus costs the additional 0.77% and has fared far far worse than the Global Managed that did not have any additional charge.

Is this one of those that I just need to ride it out and not panic? I can't see any other way without crystalizing the loss in value since the start of the year.

Ps. I'm probably about 15 to 20 years from retirement.

Linton

Since you are a long way from retirement I suggest you  look at transfering to another fund now and think long term rather than recovering the value in the short/medium term.  The constituents of your current fund are highly volatile.  For example Baillie Gifford American has more than doubled and then halved in value since January 2020.  It could well double again when the current economic problems are resolved but it could well not.  I see keeping your current fund  as high risk.

Your previous fund, LP Global Managed, may be a better choice.  However this seems to be another case where the fund has a different name in Morningstar so if you can supply the ISIN number I can check further.