Good fund choices for SIPP?

Springfield1970

Hello all

I am really enjoying reading and learning about investments and savings and thank you all for your valuable insights.  I am currently 7 years into this pension plan, with another 15 years plus to go (I want to keep working until I drop as I love my job, I will just reduce my hours, Im self employed). My plan is to overpay my stressful mortgage off in 6-7 years and use the TFLS. It may be detrimental financially but mentally it will mean the world to me.

Could you shed some light on these funds? I am in an adventurous plan, and am paying someone .75% PA to manage the pension, and approx .35% to Aegon for the platform.

What kinds of funds are they? Does anyone out there know anything about them? They will change, as the adviser moves things around, but I was just interested to learn more.

I'm happy with the growth, and accept that 2022 was a bad year for all, but overall it's ticking along, not really much growth overall at the moment.  (pre covid it was growing at quite a rate, but I was in various other funds). I am only adding money that would get taxed at 40% so it's a win win for me anyway.


Aegon Gbl Sust Eq C Acc GBP 20%
Baillie Gifford Gbl Discovery B Acc 19.75%
Cash .25%
Baillie Gifford LgTrmGblGrwInv B A 20%
Baillie Gifford PostivChng B A 20%
Scot Eq Technology ARC 20%

OldScientist

A google search indicates...

Aegon Gbl Sust Eq C Acc GBP 20%    Global flex cap equities sustainable, can hold 20% cash/bonds (active, OCF=0.45%)

Baillie Gifford Gbl Discovery B Acc 19.75% Global small cap (active, OCF=0.78%)

Cash .25%

Baillie Gifford LgTrmGblGrwInv B A 20% Global growth equities (active, OCF=0.64%)

Baillie Gifford PostivChng B A 20% Global, companies that make 'positive change' (active, OCF=0.53%)

Scot Eq Technology ARC 20% Global, technology companies (index, OCF=0.31%)

On a very quick read, there seems to be some overlap in holdings between the funds (e.g., NVIDIA appears in several) and it appears to be quite heavy (at least for my tastes) in small cap and US holdings. The overall charges, while not overly expensive for active funds, are high compared to index funds.

Pretty well 100% equities, which with 15 years to go which isn't outrageous if you have the appetite for possibility of a lot of volatility.

Springfield1970

Thank you @OldScientist for taking the time to reply. I'll be meeting yearly with my WA and each time I hope to be more informed and perhaps get more involved with the choices.

Linton

Springfield1970 said:

Hello all

I am really enjoying reading and learning about investments and savings and thank you all for your valuable insights.  I am currently 7 years into this pension plan, with another 15 years plus to go (I want to keep working until I drop as I love my job, I will just reduce my hours, Im self employed). My plan is to overpay my stressful mortgage off in 6-7 years and use the TFLS. It may be detrimental financially but mentally it will mean the world to me.

Could you shed some light on these funds? I am in an adventurous plan, and am paying someone .75% PA to manage the pension, and approx .35% to Aegon for the platform.

What kinds of funds are they? Does anyone out there know anything about them? They will change, as the adviser moves things around, but I was just interested to learn more.

I'm happy with the growth, and accept that 2022 was a bad year for all, but overall it's ticking along, not really much growth overall at the moment.  (pre covid it was growing at quite a rate, but I was in various other funds). I am only adding money that would get taxed at 40% so it's a win win for me anyway.


Aegon Gbl Sust Eq C Acc GBP 20%
Baillie Gifford Gbl Discovery B Acc 19.75%
Cash .25%
Baillie Gifford LgTrmGblGrwInv B A 20%
Baillie Gifford PostivChng B A 20%
Scot Eq Technology ARC 20%

Are you sure your nerves could stand these sort of funds?  Baillie Gifford funds in particular can be highly volatile.  The Gloal Discovery fund increased in value by 2-3 fold during 2020 and has since lost all those gains.

Even your least risky choice, Aegon Gbl Sust,  is a pretty high risk growth fund with 40% invested in technology companies.  It lost 1/3rd of its value in 2021/2022 and has not yet recovered.

Perhaps you would sleep better if you invested sensibly and broadly rather than looking for "good" funds which are highly invested in a small number of market sectors. Your 6-7 years to paying off your  mortgage is short term for investments.

Beddie

Are you "paying someone .75% PA to manage the pension, and approx .35% to Aegon for the platform" as well as fund management charges, usually around another 0.75-1%? Or is the 0.75% the fund management?

If it's all 3, charges are too high.

Also, as above, this is a higher risk portfolio and you don't have that many years to go. Perhaps dial it down a bit. Of course, there are many options, from multi-asset finds, to global trackers, to Vanguard Lifestrategy etc. Worth doing lots of reading.

QrizB

Beddie said:

Are you "paying someone .75% PA to manage the pension, and approx .35% to Aegon for the platform" as well as fund management charges, usually around another 0.75-1%? Or is the 0.75% the fund management?
If it's all 3, charges are too high.

OP has a WA - wealth advisor? - which is one of those nebulous titles that's sometimes associated with higher-than-usial charges.

Springfield1970

Thank you all for your feedback.  I didn't realise just how adventurous these funds were.  After some great gains up to 2020-2021 the overall result is very little growth (.5% ish).

I am going to wait for some movement upwards then talk to my wealth adviser (who really isn't making much money from me at all seeing as my pension is under £100k) about moving into something more middle of the road. I get a meeting of an hour with him a year and he chooses my funds and advises me in other areas.. for a few hundred a year I think that's been a good choice, whether that is. true for the future I don't know. My platform doesn't charge anything if I go over £250k too so that's another thing to consider.  

I suppose I am in the lucky position currently of being able to wait out a low period and choose when to start drawing down or an annuity or 50/50 of both.

Next question, can you point me towards learning about how to select good long term funds within Aegon?
Or even some suggestions so I can research the kinds of funds/companies/investements that are solid.

Is another 15 years of investing considered 'not that long to go'?

noclaf

That's quite a racy portfolio, this fund in particular 'Baillie Gifford LgTrmGblGrwIn' can be very volatile....one of my smaller pensions years back was fully invested (....a decision I made ) and it took an absolute hammering as did all the other growth orientated funds a few years back. Nothing wrong with it and you only have 20% allocated but that fund along with the other equity/tech heavy funds will be a bumpy ride!

Linton

Springfield1970 said:

Thank you all for your feedback.  I didn't realise just how adventurous these funds were.  After some great gains up to 2020-2021 the overall result is very little growth (.5% ish).

I am going to wait for some movement upwards then talk to my wealth adviser (who really isn't making much money from me at all seeing as my pension is under £100k) about moving into something more middle of the road. I get a meeting of an hour with him a year and he chooses my funds and advises me in other areas.. for a few hundred a year I think that's been a good choice, whether that is. true for the future I don't know. My platform doesn't charge anything if I go over £250k too so that's another thing to consider.  

I suppose I am in the lucky position currently of being able to wait out a low period and choose when to start drawing down or an annuity or 50/50 of both.

Next question, can you point me towards learning about how to select good long term funds within Aegon?
Or even some suggestions so I can research the kinds of funds/companies/investements that are solid.

Is another 15 years of investing considered 'not that long to go'?

A couple of points.  In my view .....


 - One should not look for good funds in isolation but rather a set of reasonable funds that work together to cover a wide range of areas.  That is one of the problems I see with your Adventurous portfolio, the funds mostly invest in the same tech/growth types of companies so if one fund goes down they all go down.  Having multiple funds does not help you very much.  A large fall in most of your funds could tempt you to protect your pension by selling thus crystallising your losses.

There is much to be said for a single global index fund.  This could be spiced up with a relatively small allocation to adventurous funds if you wished.

 - 15 years is perhaps in the lower end of long term.  Once you get to 10 years you are talking medium term.  One concern was your TFLS to pay off your mortgage in 6-7 years.

On the other hand if you are planning to retire with draw-down in 15 years much of your money may not be used for say a further 10+ years.  You should not be seeing your retirement date as the end point but rather aiming when you retire to have a range of investments that together could cover both the shorter term for your income needs and to provide long term protection against inflation.

Springfield1970

I've just visited this thread of mine this morning 14 months after I started it, and am glad to see that despite my laziness and lack of knowledge, luck has been on my side with some of these funds (particularly Scot eq and BG long term.)  Overall 16% growth in a year which is unsustainable, and a clear sign that I need to move into safer options. Makes up for the poor 20% total return in 7 years, basically it seems that the first 6 years of investing (aside from the tax relief) I would have been better off in cash.

I need 4% growth yearly, plus my contributions, to hit my 2 goals,

1. Use TFLS and mortgage overpayments to be free of the burden and the insurance etc related to the mortgage, in 5.5 years, (to reduce my working hours by 50% and increase my travel weeks)) and

2.  get to a fund size which provides £12k a year to add to my state pension in 13 years time, in addition to my job/business, which I love and will be doing until I drop (working between 100-200 hours PA). So my income will be £24k-£50, depending on if I feel like working. 

3. Get to the point soon where I can drop the WA, and get over the £250k sum to have no charges there either. 

Therefore I will be instructing my fund manager today, in our annual meeting, to switch out into something more stable.

My online platform has improved so I can research what I'm investing in, and have more understanding of the helpful comments you lot gave me!

Any more thoughts? The platform is Aegon Retirement Choices.  I'm looking for stability (around the 4% mark)

@OldScientist @dunstonh @Linton @Albermarle are you able to advise please?

cloud_dog

Springfield1970 said:

3. Get to the point soon where I can drop the WA, and get over the £250k sum to have no charges there either. 

You mentioned the 'no charges when you get to £250k', but are you sure that is correct?  More usually with these types of charging schedules it means that the amount above the £250k level does not incur a charge.