SIPP - is everything in 'HSBC FTSE All-World Index' enough?

SamDude

Last year I consolidated my workplace pensions into a ii SIPP.

It is around £100k and is all invested in HSBC FTSE All-World Index C Acc.

I am currently contributing into a workplace pension, so the ii SIPP will not be used for regular contributions. I am not going to need it for 15 years, so I'm happy to leave it to grow over time.

I have decided to consolidate another previous workplace pension into the ii SIPP. It is around £70k and I'd like to understand whether it's worth putting it into the same fund (HSBC), or if I should consider something else?

Is there anything that I am missing out on with the HSBC FTSE All-World Index fund that would be covered with a different fund?

Marcon

What are your objectives/attitude to risk?

SamDude

Marcon said:

What are your objectives/attitude to risk?

I would say above average risk - I understand that it's invested for the long term and I want it to grow.
My workplace pension is with Royal London and I've moved it from 'balanced' to 'moderately adventurous' (Governed Portfolio 4 to GP7).

Linton

As long as you dont panic and sell everything in the occasional but temporary 40%-50% crash I believe the HSBC fund could be fine for your purposes for the time being.  You may wish to de-risk as you get closer to needing the money.

There are relatively small differences between different global equity index funds but that will only make a small difference which could go either way.

There is nothing much to be gained by using different funds on different platforms but if it gives you a greater peace of mind then there is nothing to be lost.

michaels

Highest 'worst results' have historically come from a mix of stocks and bonds so what you do with these pots may depend what other assets you hold.

Pat38493

It seems to be a good fund.  I have a chunk of my pension in that fund.

The key question is - what would you do if 5 years from now, there is a market crash and your fund lost 50%?  If the answer is, nothing, then you should be fine as it will recover again.  Losses are not losses until you realise them.

If the answer is - I would panic and sell up at a big loss, maybe not so much.

As said by Linton - you might want to consider reducing your equity exposure as you get close to drawdown, but not by too much - people often reduce it too much, forgetting that they will still be an investor for decades.  Do some reading about “bucket approach” or “pension drawdown strategies” but you have plenty of time for that.

Bostonerimus1

Yes that's fine for your equity allocation and having a high equity allocation is ok if you have a long time horizon and the common sense not to panic in the down times. You might want to consider a Bond Index fund to complement your equities.

Albermarle

Is there anything that I am missing out on with the HSBC FTSE All-World Index fund that would be covered with a different fund?

If you mean is it worth investing in an alternative  global equity index fund, then the answer is probably not.

If you mean is it worth looking at the thousands of investments that are not global equity index funds, then that would be a wider question.

SamDude

Albermarle said:

Is there anything that I am missing out on with the HSBC FTSE All-World Index fund that would be covered with a different fund?

If you mean is it worth investing in an alternative  global equity index fund, then the answer is probably not.

If you mean is it worth looking at the thousands of investments that are not global equity index funds, then that would be a wider question.

Thanks @Albermarle and all.

I've watched the James Shack video series about riding the long term, so I understand the nature of holding (and buying more when there is a 'sale' on during the down times).

Over the long term there is more growth in equities, so when I switched my workplace pension to GP7, I did it to reduce the percentage of bonds because they have sunk recently in favour of more equities. 

The wider question in bold is what I'm looking to learn more about - if I should consider spreading between different funds, what are the complimentary non global equity index funds that I should consider?
(I'm not asking for advice on 'what to pick', but it would be good to get a shortlist to work from...)

Albermarle

The main issue is asset allocation. Currently you are 100% equity.
If you wanted to stay 100% equity but not all in global trackers, you are probably looking at some kind of actively managed fund or an index tracker with a bias towards certain sectors or geographies.
If you want to dilute the 100% equity, then you are looking at Gilts/bonds/cash/gold/property in some proportion ( in simple terms ) .
Low cost multi asset funds are popular. Typically a mixture of equity and bonds in different proportions.
If you bought a 50:50 one with the £70K that would leave you overall with around 80% equities.

Pat38493

SamDude said:

Albermarle said:

Is there anything that I am missing out on with the HSBC FTSE All-World Index fund that would be covered with a different fund?

If you mean is it worth investing in an alternative  global equity index fund, then the answer is probably not.

If you mean is it worth looking at the thousands of investments that are not global equity index funds, then that would be a wider question.

Thanks @Albermarle and all.

I've watched the James Shack video series about riding the long term, so I understand the nature of holding (and buying more when there is a 'sale' on during the down times).

Over the long term there is more growth in equities, so when I switched my workplace pension to GP7, I did it to reduce the percentage of bonds because they have sunk recently in favour of more equities. 

The wider question in bold is what I'm looking to learn more about - if I should consider spreading between different funds, what are the complimentary non global equity index funds that I should consider?
(I'm not asking for advice on 'what to pick', but it would be good to get a shortlist to work from...)

You won’t really go far wrong with keeping it all in a global tracker.  If you don’t want to increase your bond proportion as outlined by Albamarle, you could still stay in low cost tracker funds, but then the question would become whether you want to tweak the diversification a bit.  

Example - you could put a small amount in an emerging markets tracker fund or small cap, to increase your exposure to those areas above what the global tracker will do - this might increase your risk/volatility a bit with arguable potential for bigger gains.

I have the majority of my fund in global trackers but I have a small % in emerging markets tracker fund (Vanguard) and also a small % in small cap (Vanguard again).  There is probably a bit of overlap there

You could also put a small amount in real estate as a kid of diversifyer but I decided against that.

If you look at the last 10 years, the argument would be that you would have done better by putting it all into a tracker fund that excludes the UK - look for global trackers that are “ex-uk”.  UK economy didn’t seem to perform well in stock market terms in the last decade - it’s almost as if the UK electorate made some poor economic decisions or elected an incompetent government or suchlike, but I can’t imagine how that could be the case .  

In reality, if probably doesn’t make much difference that you will be able to know in advance and the bigger choice is the mix between equities and safer investments.