Blackrock Index Fund with Fidelity Workplace Pension

Dear all,

I am after some insights on the best fund strategy for my main workplace pension with Fidelity. 
I am currently making all my contributions into the BLACKROCK GLOBAL EQUITY 10:80:10 fund under their lifecycle strategy. The fund has approximately 10% invested in the shares of UK companies, 10% in the shares of companies in the Emerging Markets. The remaining 80% is invested in overseas companies split in equal weights between the following three regions: US, Europe ex-UK, and Japan & Pacific Rim. Today's North American Stock allocation shows circa 26% which I think is too low (I am fine with more volatility given my age)

I would like my investment to try and mirror a truly Global All Cap Index Fund as much as i can (which is unfortunately not available in the list of funds) with a higher S&P500 allocation (at least 50%). So the only other low fee Passive fund I'd be interested in is BLACKROCK WORLD (EX-UK) EQUITY INDEX with a high allocation of 72% towards S&P500, but very low low exposure to Emerging markets and the UK.

Do you think there is a combination of these two funds I can put in place to have more alignment with a Global Index Fund? Any additional thoughts on the above strategy?

Thank you,
Tashi



Comments

  • dunstonh
    dunstonh Posts: 115,651
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     with a higher S&P500 allocation (at least 50%). 
    Interesting management decision.  Historically, for UK investors, US cycles between a good cycle and a poor cycle, often following currency movements.  We have just come off a good one but with the pound likely to rise against the dollar in this cycle and handicap US equity growth in Sterling, that is a brave move by you to allocate so much to the S&P500.



    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • gm0
    gm0 Posts: 793
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    Clearly you can tilt towards the US or global passive mix by mixing these two.  It would be unusual to be offered World ex UK without a UK option around.  So you can make World developed with UK at home market bias to taste - 0 / 4% /  10% - whatever it is for you if you have that.  At weight is only about 4% and any less would not be worth bothering with.

    I suggest you get a free account at trust net. Find these (or similar mandate and portfolio funds) and play with the mix until you find a mix that you like

    A way to avoid timing buying/selling across regions and currencies is to adjust future contributions but leave existing ones alone in the unitised investments they are already in.  And adjust the calculations about how your portfolio evolves with further contribution.

    Implicit in your post is a view that you are underweight the US market and that that is a bad thing. Perhaps because it has done so well in the past decade or two.  Which may or may not mean that it is plumply valued now and future returns from these prices will be lower than alternatives from international markets.

    You need to decide if market cap at weight global developed passive is the tilt you want.  Some come here wanting to lean in to S&P500 FAANG and NASDAQ.  Even more US.  And others tilt away towards Asia and other growth stories and assets because they don't like the stock concentration of the US mega caps.

    At different points along a 20-50 year journey both of these choices may look stupid or prescient - just at different times.
  • Albermarle
    Albermarle Posts: 21,094
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    We have just come off a good one but with the pound likely to rise against the dollar in this cycle and handicap US equity growth in Sterling, 

    Presumably a hedged S&P 500 fund would help to resolve that, assuming it happens of course?

    Fidelity do have a hedged US equity fund on the retail platform ( it is actually a Fidelity fund I think) , but maybe not in a workplace one

  • dunstonh
    dunstonh Posts: 115,651
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    Presumably a hedged S&P 500 fund would help to resolve that, assuming it happens of course?
    Many inexperienced UK based investors looking at recent past performance will be looking at a period when sterling fell.   So, that means UK investors got better US returns than US investors.  They aren't aware that the perfect weather that gave a double boost can turn into a perfect storm that can give a double negative.    Currency hedge removes the currency differences.  That would have been a poor option between 2009 and 2021 but could be a good option ahead.

    Fidelity do have a hedged US equity fund on the retail platform ( it is actually a Fidelity fund I think) , but maybe not in a workplace one
    You are right about the Fidelity fund. I used it in our portfolio when Sterling hit the 1.1x ,mark.  But the workplace pension from Fidelity is limited and uses more expensive share classes too.  I think they only offer the non-currency hedged version.



    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • I have a fidelity workplace pension and have gone for 

    - blackrock developed world (ex-uk) (~88%)
    - blackrock uk (~4%)
    - blackrock emerging markets (~8%)

    this sort of mirrors the HSBC ftse all world fund.
  • Tashitalksmoney
    Tashitalksmoney Posts: 10
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    edited 3 November 2023 at 8:26PM
    Thank you all for the replies - some food for thought. I wasn't aware about the hedged type of fund so will look into it.

    Interesting management decision.  Historically, for UK investors, US cycles between a good cycle and a poor cycle, often following currency movements.  We have just come off a good one but with the pound likely to rise against the dollar in this cycle and handicap US equity growth in Sterling, that is a brave move by you to allocate so much to the S&P500.
    I did check past performance of each fund but am well aware that US shares might somewhat be overinflated right now, and that 101 Investing principle dictates that past performance is not indicative of future results. 
    The idea is just to try to mirror a Global index fund (like the one in my tiny SIPP from Vanguard FTSE Global index) and unfortunately the Fidelity work pension plan has only a very limited selection of passive low cost funds.

    I still have 20-25 years before retirement (early retirement hopefully) just want to make sure my funds are invested in the most diverse global type fund for the next couple of decades.

    BLACKROCK GLOBAL EQUITY 10:80:10 is also medium risk (M1) but I feel I can increase the risk a little for the next 10-15 years, and wil try not to check it too often

    A way to avoid timing buying/selling across regions and currencies is to adjust future contributions but leave existing ones alone in the unitised investments they are already in.  And adjust the calculations about how your portfolio evolves with further contribution.

    Thank you, this is exactly what i wanted to do i.e. leave 100% of my current investment in the existing fund and redirect the new contribution towards something more riskier and with a larger US exposure to balance it out

    I have a fidelity workplace pension and have gone for 

    - blackrock developed world (ex-uk) (~88%)
    - blackrock uk (~4%)
    - blackrock emerging markets (~8%)

    this sort of mirrors the HSBC ftse all world fund.


    Thank you. Yes also thinking Emerging markets although the 10-80-10 already has 10% of it.







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