Poor pension fund performance

Troytempest

I must say that over the past 15 months I have been monitoring my Aviva fund very closely and watched it drop about 25% in value. However my pension is geared towards an annuity purchase which I have just completed and the cost to buy the required annuity (to cover a GMP) is much more than 25% lower than it was so my concerns were unfounded in the end.

Bostonerimus1

briktopp said:

Blimey it's confusing 

Not really, you’ll see two ways of describing your investment growth; cumulative and annualized. They are pretty self descriptive. The cumulative is the total percentage growth over a number of years and the annualized growth gives you the average annual growth over a number of years. 

retiringtoosoon

Personally I like downturns just before I make significant pension contributions….thinking back to march this year my employer made a £23k contribution that month. Investment funds were quite subdued then so I was well chuffed with how many units it bought!

clacky100

I have also been watching my Sipp and over the last few years it has grown 0% and this is a managed Sipp.
I realise funds are not performing well due to Russia,Covid and Brexit but surely my Sipp should be making something.
Can I transfer my Sipp,and manage it myself,because I think  I can do a far better job and without all the fees

Bostonerimus1

clacky100 said:

I have also been watching my Sipp and over the last few years it has grown 0% and this is a managed Sipp.
I realise funds are not performing well due to Russia,Covid and Brexit but surely my Sipp should be making something.
Can I transfer my Sipp,and manage it myself,because I think  I can do a far better job and without all the fees

Many funds have performed positively over the last 5 years. Something as simple as a Vanguard Lifestrategy 60% equities has grown 21% over the last 5 years which is about 3.8% a year. That's not spectacular, but such funds will never be spectacular. There are many other similar funds from providers like HSBC, Fidelity, etc. Frankly any similar "managed" pension fund that is not up by the same numbers is either managed by idiots or by folks taking way too much in fees. Far too often both happen together. I DIY using a US and an International equity tracker to keep costs down and as I have a high equity percentage I've averaged 8% annual growth over the last 5 years. I do zero management and just let things tick along as I'm satisfied with my asset allocation and never invest in niche stocks, funds or markets.

Bostonerimus1

retiringtoosoon said:

Personally I like downturns just before I make significant pension contributions….thinking back to march this year my employer made a £23k contribution that month. Investment funds were quite subdued then so I was well chuffed with how many units it bought!

The exact pattern of stock and bond market fluctuations will determine which frequency and timing of contributions comes out better in the end. But that's a very academic question as you can never know the future of the markets. So most people are probably best served by the discipline and cost averaging of regular monthly contributions. I'd also add that most people should not worry about the ups and downs of markets and invest broadly in the expectation of general economic growth over times scales of decades.

dunstonh

clacky100 said:

I have also been watching my Sipp and over the last few years it has grown 0% and this is a managed Sipp.
I realise funds are not performing well due to Russia,Covid and Brexit but surely my Sipp should be making something.
Can I transfer my Sipp,and manage it myself,because I think  I can do a far better job and without all the fees

What would you have done differently in 2022 when virtually every area of investment was down (and some suffering their worst negative in over 100 years)?

And if you are measuring investments only over a a few years, then you really need to learn more about investing before you decide to make changes.

Bostonerimus1

dunstonh said:

clacky100 said:

I have also been watching my Sipp and over the last few years it has grown 0% and this is a managed Sipp.
I realise funds are not performing well due to Russia,Covid and Brexit but surely my Sipp should be making something.
Can I transfer my Sipp,and manage it myself,because I think  I can do a far better job and without all the fees

What would you have done differently in 2022 when virtually every area of investment was down (and some suffering their worst negative in over 100 years)?

And if you are measuring investments only over a a few years, then you really need to learn more about investing before you decide to make changes.

Maybe a more appropriate question is to ask what the SIPP mangers were doing and charging? Of course the performance is also going to depend on the asset allocation and we are assuming that the 0% growth is accurate, but at least questions are being asked.

dunstonh

Maybe a more appropriate question is to ask what the SIPP mangers were doing and charging?

No it isn't.  Charges are always a secondary concern to the suitability of the investments.

There is no point, at this stage, sending the OP off on a wild goose chasse looking at things that make 0.x% pa. difference when they don't actually know about the investments.   If someone has suffered a 15% loss over 2022 (around the typical) than whether the charges could have been 0.1% better is not addressing the issue.

Bostonerimus1

dunstonh said:

Maybe a more appropriate question is to ask what the SIPP mangers were doing and charging?

No it isn't.  Charges are always a secondary concern to the suitability of the investments.

There is no point, at this stage, sending the OP off on a wild goose chasse looking at things that make 0.x% pa. difference when they don't actually know about the investments.   If someone has suffered a 15% loss over 2022 (around the typical) than whether the charges could have been 0.1% better is not addressing the issue.

As you say the OP is a little in the dark here wrt their investments. So the natural thing should be to find out about them and how they are being managed to produce returns that are a disappointment. The OP is probably ill equipped to answer your question about "what would you have done differently", but at least they have the defence that they are not charging someone to take care of the money and they can easily learn the basics of investment. The OP does need to understand investment funds and the natural ups and downs, but that does not make their asking questions useless or excuse their managers from pretty dismal results. Saving 0.1% if they are getting excellent service and don't what the small amount of bother associated with DIY might not be worth it, but the fees might be more and the service doesn't look stellar so the questions should be asked.

The worrying thing is that people in similar demographics to the OP will probably also have poor results as the finance industry will have dropped them into the same asset allocations. This is where an IFA or a knowledgeable DIYer wins out as they can develop a holistic solution that dovetails with their other finances.