Poor pension fund performance

briktopp

I am 51 and hoping to use cash from pension funds to start a new career around the age of 55.

Ive funds with AEGON (scottish widows) and Legal and general. 

I just wanted to check im not the only one who's watched their funds perform direly for coming up to 5 years now. I know these funds have ups and and downs but 5 years of effectively zero growth is making me think i'm doing something hideously wrong and its not just global economic factors

from what i understand the funds are medium risk balanced investment products which seems suitable for my age and circumstances.. but should i be more proactive and change to other types of funds? if so what sort should i be looking at?

im just generally interested in other peoples experiences

dunstonh

I just wanted to check im not the only one who's watched their funds perform direly for coming up to 5 years now.

If you have seen 5 years of dire performance then something is wrong.

2018 was a negative year.
2019 was a very good year
2020 had the third biggest drop in the last 25 years in Spring but finished average to good
2021 was better than long term average
2022 was really poor for low risk investors (worst in over 100 years) but small losses on higher risk investors.
2023 YTD is up but spent most of the last 5 months in a wavy line not going anywhere.

2022 was so bad for many that it wiped out a number of the previous years.     Is it possible that only 2018 and 2022 were bad and not the other years?

 I know these funds have ups and and downs but 5 years of effectively zero growth is making me think i'm doing something hideously wrong and its not just global economic factors

To be at 2018 levels suggests something is up.    If that is the case, its likely you are heavy in fixed interest securities (such as Gilts) or tech stocks.    These were the two worst areas of 2022.

but should i be more proactive and change to other types of funds? if so what sort should i be looking at?

You should stick to multi-asset funds unless you know what you are doing or employ someone to do it for you.    Going into single sector funds and building your own portfolio requires knowledge and understanding.

tony4147

briktopp said:

I am 51 and hoping to use cash from pension funds to start a new career around the age of 55.

Ive funds with AEGON (scottish widows) and Legal and general. 

I just wanted to check im not the only one who's watched their funds perform direly for coming up to 5 years now. I know these funds have ups and and downs but 5 years of effectively zero growth is making me think i'm doing something hideously wrong and its not just global economic factors

from what i understand the funds are medium risk balanced investment products which seems suitable for my age and circumstances.. but should i be more proactive and change to other types of funds? if so what sort should i be looking at?

im just generally interested in other peoples experiences

I’m in the same position except I’m 60 and looking to retire at 65, I posted a thread further down ‘SIPP performance’ my SIPP has only made approx 1% per year over the last 5 yrs.
In my case I don’t really know what to do, I have an IFA to manage my SIPP but I’m not happy with the performance and I’m planning on investing another £200k into it over the next 5 years but do feel that I’m throwing good money after bad. At the moment the funds are down so it’s not really the time to swap funds.

dunstonh

In my case I don’t really know what to do, I have an IFA to manage my SIPP but I’m not happy with the performance and I’m planning on investing another £200k into it over the next 5 years but do feel that I’m throwing good money after bad.

You are thinking the opposite of what is best.
When units are cheaper, that is the best time to contribute.  Negative periods whilst you are still contributing are great news.      You will make more from these units whilst are you feeling negative about it than you will make from the units you bought in the growth years when you were feeling positive above it.

At the moment the funds are down so it’s not really the time to swap funds.

That isn't how it works.  There can be good reasons to change.  You look forward.  Not backward.

arnoldy

"5 years of effectively zero growth"

Whats even worse is that you would have needed 24% growth just to cover inflation in the last 5 years & stand still.

OldScientist

tony4147 said:

briktopp said:

I am 51 and hoping to use cash from pension funds to start a new career around the age of 55.

Ive funds with AEGON (scottish widows) and Legal and general. 

I just wanted to check im not the only one who's watched their funds perform direly for coming up to 5 years now. I know these funds have ups and and downs but 5 years of effectively zero growth is making me think i'm doing something hideously wrong and its not just global economic factors

from what i understand the funds are medium risk balanced investment products which seems suitable for my age and circumstances.. but should i be more proactive and change to other types of funds? if so what sort should i be looking at?

im just generally interested in other peoples experiences

I’m in the same position except I’m 60 and looking to retire at 65, I posted a thread further down ‘SIPP performance’ my SIPP has only made approx 1% per year over the last 5 yrs.
In my case I don’t really know what to do, I have an IFA to manage my SIPP but I’m not happy with the performance and I’m planning on investing another £200k into it over the next 5 years but do feel that I’m throwing good money after bad. At the moment the funds are down so it’s not really the time to swap funds.

It might be worth returning to your thread - from the list of funds you posted, the returns made over the last 5 years were about 4.1% see 19 August at 9:18AM) - your IFA fee subtracted 0.7% from this leaving 3.4%. There are a further two percentage points to be accounted for.

OldScientist

briktopp said:

I am 51 and hoping to use cash from pension funds to start a new career around the age of 55.

Ive funds with AEGON (scottish widows) and Legal and general. 

I just wanted to check im not the only one who's watched their funds perform direly for coming up to 5 years now. I know these funds have ups and and downs but 5 years of effectively zero growth is making me think i'm doing something hideously wrong and its not just global economic factors

from what i understand the funds are medium risk balanced investment products which seems suitable for my age and circumstances.. but should i be more proactive and change to other types of funds? if so what sort should i be looking at?

im just generally interested in other peoples experiences

Returns over the last 5 years in balanced funds rather depends on the mix of equities and bonds. For example, Vanguard Lifestyle 60% equity fund has had a 2.9% annualised return over the last 5 years, whereas the 40% equity fund has had a annualised return of 1.3%. So the exact funds matter.

Platform charges will reduce this a bit, although I think Aegon and L&G are fairly competitive in that regard (~0.3% fees?)

As others have said, there is nothing you can do about the last 5 years and no-one can predict what the next 5 years will bring, so I've no idea what funds will perform best. However, you mention that you want to use the money to start a new career - does this require an amount of capital that you already have? In which case, securing that capital with either short term bond or money market funds (if they are available on your platform) might be worthwhile (this is analogous to putting the money in cash).

Bostonerimus1

tony4147 said:

briktopp said:

I am 51 and hoping to use cash from pension funds to start a new career around the age of 55.

Ive funds with AEGON (scottish widows) and Legal and general. 

I just wanted to check im not the only one who's watched their funds perform direly for coming up to 5 years now. I know these funds have ups and and downs but 5 years of effectively zero growth is making me think i'm doing something hideously wrong and its not just global economic factors

from what i understand the funds are medium risk balanced investment products which seems suitable for my age and circumstances.. but should i be more proactive and change to other types of funds? if so what sort should i be looking at?

im just generally interested in other peoples experiences

I’m in the same position except I’m 60 and looking to retire at 65, I posted a thread further down ‘SIPP performance’ my SIPP has only made approx 1% per year over the last 5 yrs.
In my case I don’t really know what to do, I have an IFA to manage my SIPP but I’m not happy with the performance and I’m planning on investing another £200k into it over the next 5 years but do feel that I’m throwing good money after bad. At the moment the funds are down so it’s not really the time to swap funds.

As OldScientist points out your published portfolio should have netted you a 3.4% annual growth, so something is off somewhere. For my part I have had a roughly 85% equity (55% US stocks, 30% international) and 15% bonds allocation over the last 5 years, it has varied as I don't rebalance or sell anything, so I mostly avoided the bond losses and have an 8% annual return. I use a few index trackers to keep costs to a minimum and don't over think things.

Ginsipper007

First time logging into this forum, because I received my Aegon statement recently and I'm also concerned about the dire performance of zero growth for the last 5 years.  In fact, it lost about 20% 20-21 and hasn't recovered.  Prior to this, it was performing pretty well, i.e. up until about 2018.

dunstonh

 In fact, it lost about 20% 20-21 and hasn't recovered. 

It shouldn't have lost anything in 2020 or 2021.  Both of those years were positive in all areas.

2018 was negative in equities.. 2022 was heavily negative in fixed interest securities but only within normal range for  equities.

Kaizen917

At the moment the funds are down so it’s not really the time to swap funds.

I have been pondering on this part lately as I just started a transfer of a small pot into my SIPP and a partial one form my company DC pension. It really does seem like a bad time but then transfers take a while so this isnt looking easy to time at first place. Also, while funds dont go up and down at the same rates, even if transferring at a low point, surely we are also more likely buying funds at the new provider at lower price too?