Changing funds/pension

monaymadlol

Thank you that's great. I'll look into the specific weightings soon.

Would there be any sort of benefit in hedging my bets by opening a passive multi index fund SIPP and either splitting my monthly payments into both, or stopping payments to the SW pension and building up a passive multi index pot?

monaymadlol

Additionally, I will be looking to work employed part time in the NHS later this year, for how long, not sure, but likely long term, so I'll opt into my first work place pension there no doubt. Not sure if that will affect my investment or retirement decisions (by reducing my personal pension contributions), but I guess that's something to factor in, possibly.

JohnWinder

I know nothing of SIPP or NHS pensions, sorry. And I don’t feel I can benefit you on your ‘hedge betting’ thoughts.

Meanwhile I came across this UK site I’ve not heard mentioned. Seems to have a lot of sensible stuff to me, but wasn’t easy to find my way around. https://occaminvesting.co.uk/best-vanguard-passive-index-tracker-fund-uk/ 

monaymadlol

I've been doing some more looking into switching my actively managed/high fee SW personal pension to a SIPP.
I'm thinking the vanguard target retirement age is a good, readymade passive fund, and it slowly changes the equities/bond distribution closer to retirement without me rebalancing. But my concern, if going all in on this, would be the UK bias. So I think the HSBC global strategy balanced which covers gaps, rebalances, and has some management, would also work?
Anything else I should think about or cover?
It would be a move that is a great deal of cash (for me) and with retirement 25-30 years away, I want to get it right.
From what people said, my SW funds were fine, but charges were high.

JohnWinder

Here’s a chart to see what others do: https://www.bogleheads.org/forum/viewtopic.php?p=7079273&sid=234f1f91af0299ef77ce290691faab52#p7079273. It would have you at about 70% stock-type risk assets and 30% bond/cash type.

‘vanguard target retirement age is a good, readymade passive fund, and it slowly changes the equities/bond distribution closer to retirement without me rebalancing. But my concern, if going all in on this, would be the UK bias. So I think the HSBC global strategy balanced ‘

Help me with this. As I read it, the UK equity market is 3.9% of global a year ago
https://www.statista.com/statistics/710680/global-stock-markets-by-country/.  Hsbc uses 1.5% of equities as UK, hsbc-global-strategy-portfolios-at-a-glance-q1-2022.pdf.   Vanguard looks like ~25% of equities are UK. Is that what you’re seeing?
Either would be a suitable choice in my view if the fees are similar. Plenty of people argue for a home bias, sometimes for tax reasons, or it links your spending in pounds to income in pounds, or history shows it has served people well in terms of volatility and withdrawal capacity. We can find references if you want to chase it down. We don’t know which will do better for you, long term.
Impulse is your enemy with investing. Your SW is not crazy bad. Marshall your thoughts, write down your reasoning, then sit on it for a few months and re-visit the decision before you go moving big money around to see if it still sounds sensible. During that time read more; it will help substantiate your initial decision, or throw up doubt which needs to be addressed. When you do your moving, you want it to be the last move if possible.

dunstonh

Plenty of people argue for a home bias, sometimes for tax reasons, 

There is no tax bias in the UK.  Global and UK are treated the same as long as the funds are domiciled in the UK (and some parts of the EU).

The UK stockmarket is a strange beast.  Historically, the UK has been very strong on small cap and mid cap.  But weak at large cap.   However, since the Brexit referendum, small and mid cap have not been as good (the fear of Brexit outcomes affecting smaller companies more than larger ones).   And ironically, 2022, saw UK large cap being the best western stockmarket in the world.   The first time for decades. 

Where UK vs global comes into play is currency fluctuations.   A higher UK equity allocation allows for a greater overall equity allocation compared to a lower UK equity allocation when the funds are targeting a volatility risk range.   

JohnWinder

Good tax point. I didn't make my point clearly, which was, you'll read some people (non-UK) speaking in favour of home bias without explicitly stating there are tax benefits (but having that benefit in mind). If the tax benefit doesn't apply to you as a UK investor, be aware that that advantage doesn't count and that their argument doesn't count as much for you. But as always, it's not so much a matter of 'home bias' or 'not', it's about how much because 1% of home bias doesn't matter, but adding 50% to to the UK's 3.9% might just move the needle.

Linton

dunstonh said:

Plenty of people argue for a home bias, sometimes for tax reasons, 

There is no tax bias in the UK.  Global and UK are treated the same as long as the funds are domiciled in the UK (and some parts of the EU).

The UK stockmarket is a strange beast.  Historically, the UK has been very strong on small cap and mid cap.  But weak at large cap.   However, since the Brexit referendum, small and mid cap have not been as good (the fear of Brexit outcomes affecting smaller companies more than larger ones).   And ironically, 2022, saw UK large cap being the best western stockmarket in the world.   The first time for decades. 

Where UK vs global comes into play is currency fluctuations.   A higher UK equity allocation allows for a greater overall equity allocation compared to a lower UK equity allocation when the funds are targeting a volatility risk range.   

Isnt the good performance of the FTSE100 simply due to that index having a much higher % invested in global energy and raw materials companies and a much lower % in technology rather than anything to do with the UK as such?  Those companies do relatively little business in the UK. The relative  performance of those sectors is a global phenomenon.

To what extent does investing in the FTSE100 mitigate currency risk since much of the business of FTSE100 companies will be overseas and those companies priced on a world market?

My point is that if you want to invest in the UK is the FTSE100 a good way of doing it?

dunstonh

Isnt the good performance of the FTSE100 simply due to that index having a much higher % invested in global energy and raw materials companies and a much lower % in technology rather than anything to do with the UK as such? 

Right place, right time.  When for so long its been the wrong place at the wrong time.

My point is that if you want to invest in the UK is the FTSE100 a good way of doing it?

Strictly speaking no.   The real UK is small and mid cap but it is a bumpy ride.

Linton

dunstonh said:

Isnt the good performance of the FTSE100 simply due to that index having a much higher % invested in global energy and raw materials companies and a much lower % in technology rather than anything to do with the UK as such? 

Right place, right time.  When for so long its been the wrong place at the wrong time.

My point is that if you want to invest in the UK is the FTSE100 a good way of doing it?

Strictly speaking no.   The real UK is small and mid cap but it is a bumpy ride.

So one might conclude that although one can argue about whether UK home bias is a good thing to do, investing in say VLSxx is not a very good way of doing it.