Advice appreciated for researching and picking funds compared to what I currently do

isayhello

boingy said:

+1 for a global tracker.
I'd also suggest checking the fees you are paying with Prudential. With something as long term as a pension fees can make a real dent in the growth. It might be prudent(ial) to look at moving to a cheaper provider. If you choose to do so you'll get plenty of suggestions on this forum. 

It also depends how close you are to retirement and on your general attitude to risk.

@boingy Thanks, I had considered that before, this is an old workplace pension which doesn't get any new funding, so I think the alternative is that I open a SIPP and transfer if I'm correct? The charges vary from about 0.35% to 0.7% for most funds, I had been advised that these charges aren't too bad so it might not be worth the hassle to move elsewhere. I still have about 20 years to retirement.

isayhello

dunstonh said:

since then I've tried to pick my own funds and then leave them alone to grow. 

What investment strategy have you been looking to use?
The fund selection is a bit of a hotchpotch  that suggests one method was thought about being used (sector allocation) but then a change of mind with multi-asset.   

@dunstonh I didn't have specific goals but just a bit of diversity by having a world fund and then a few others that seemed to have good performance. 

dunstonh

isayhello said:

dunstonh said:

since then I've tried to pick my own funds and then leave them alone to grow. 

What investment strategy have you been looking to use?
The fund selection is a bit of a hotchpotch  that suggests one method was thought about being used (sector allocation) but then a change of mind with multi-asset.   

@dunstonh I didn't have specific goals but just a bit of diversity by having a world fund and then a few others that seemed to have good performance. 

The random picking of funds without any structure and process will nearly always result in lower returns than a proper structured portfolio over the long term.

You have four methods on the go.

1) You have a bunch of single sector funds in some areas but are completely missing areas (such as Japan,  developed asia, emerging markets).   
2) you have a global tracker (ex UK) and a UK tracker mix 
3) a multi asset fund
4) a themed global equity fund.

Good performance over what period?   Relative to comparable investments or different investments?
For example, 2023 has been good for US equity but not UK equity.  2022 UK equity was best.     
The last decade has had US equity very strong.    However, the decade at the start of the millennium saw US equity lose money over a 10-year period and was amongst the worst areas.

Looking back just tells you what they did in a discrete period.   Did it do well as it was heavy in tech during a period that tech was best.  Did it do badly during a tech crash (such as 2021) ?

This is why you need structure and process and proper diversify rather than selective past performance.

GazzaBloom

isayhello said:

GazzaBloom said:

I look for the lowest fees, passive index trackers with a solid past performance, and global coverage. Taking particular note how the fund performs during market downturns, not that there have been many in the last 10 years, which is the furthest back some trackers history goes. It all comes down to what selection of funds you have access to on your platform. Filtering for low cost equity trackers with my Aviva pension gives me a choice of either holding individual regional large cap trackers (US, UK, Europe, Pacific Rim, Japan etc) or hold a single global tracker such as the Blackrock MSCI World Index which can be held in the currency hedged or non hedged version or the HSBC Islamic Index.

I really like the HSBC Islamic Global Equity Index you have listed and have 40% of my pension invested in it. It is a bit “growth”, tech and US leaning which some people will get their knickers all in a tizzy over though, plus, it tracks an index of only 100 companies which combined with the committee inclusion rules for constituents means you could almost view it as a quasi active fund, albeit low cost and it does cover most global regions of large cap companies.

But, aware of all of the above, I like it and happy to hold a chunk in it.

I have been heavily skewed to US holdings for some time so thoughts on currency and valuations comes into play and are on my mind as I gear up for retirement and prepare to move from accumulation to drawdown. So, there will be some asset class mix and portfolio adjustment changes over the next year or so for me.

@GazzaBloom Thanks for that, just a few questions, I'd never thought about currency hedged or non hedged, what do you mean by that?

The HSBC Islamic fund seems to be doing ok, I haven't heavily invested in it because with Prudential it has a higher charge than some of the others, I think its 0.6%, do you pay less with Aviva for this fund? Thanks for the tip about looking at how they perform in downturns, good to consider.

Ref currency. For example, when investing in a fund that hold US stocks when the fund's denominated currency is GBP then the currency fx rates can come into play.

When the pound strengthens against the dollar the value or your US investments go down and vice versa, which is in addition to any stock price variations.

You can see this clearly with the difference between the year to date performance of the Vanguard S&P500 ETF - VUSA vs the S&P500 index:

VUSA is up 18.16% YTD:

VUSA £71.27 (▲0.78%) Vanguard S&P 500 UCITS ETF USD Dis | Google Finance

But the S&P500 index is up 24.69%:

.INX 4,768.37 (▲0.59%) S&P 500 | Google Finance

GBP is up 4.65% against the USD YTD:

.INX 4,768.37 (▲0.59%) S&P 500 | Google Finance

So, the fx rates are a headwind this year for UK based US index investors. At other times it can be a tailwind. In particular, when there is a global crisis money tends to flow to the USD and GBP drops which can be in the UK based US investors favour.

When you hold a currency hedged version of a fund the fx variation is removed from the equation and you will more closely track the underlying index but there is typically a small uptick in fees for the currency hedging.

Yeah Aviva is a little cheaper for the HSBC Islamic fund at 0.46%, other index funds are lower on Aviva at 0.16%, so 0.3% more expensive but it does perform well so not the end of the world but worth keeping an eye on.

Hoenir

isayhello said:

 can anyone share tips for how they approach funds in this scenario or in a more general way (as I'd like to use this approach for an ISA too if the general sites and tools can be used).

Read, watch, listen ,attend and follow.  The wider and more diverse the content the better. To make a judgemental call the more informed you become, the less lightly you'll make a decision you later come to regret. 

Eyeful

If you want a simple strategy
(a) first watch this:-  https://www.kroijer.com/
(b) then pick a low cost passive global multi-asset fund to implement it.
(c) now get on and do the things you enjoy in life.

Cus

I don't research or pick funds, I let my wealth manager lose my money doing that.. 😁

Bostonerimus1

I don’t do any specific fund research as I basically invest in US and international index funds from major fund companies. I’ve owned the same funds for over 20 years.  I do look to keep my costs down so do compare fees. I spend some time on asset allocation, but when I have that set I could implement my plan with any number of index trackers from Vanguard, HSBC etc. So a global tracker and a bond index fund in your chosen proportions or a single multi-asset fund are good solutions IMO. 

isayhello

GazzaBloom said:

Ref currency. For example, when investing in a fund that hold US stocks when the fund's denominated currency is GBP then the currency fx rates can come into play.

When the pound strengthens against the dollar the value or your US investments go down and vice versa, which is in addition to any stock price variations.

You can see this clearly with the difference between the year to date performance of the Vanguard S&P500 ETF - VUSA vs the S&P500 index:

VUSA is up 18.16% YTD:

VUSA £71.27 (▲0.78%) Vanguard S&P 500 UCITS ETF USD Dis | Google Finance

But the S&P500 index is up 24.69%:

.INX 4,768.37 (▲0.59%) S&P 500 | Google Finance

GBP is up 4.65% against the USD YTD:

.INX 4,768.37 (▲0.59%) S&P 500 | Google Finance

So, the fx rates are a headwind this year for UK based US index investors. At other times it can be a tailwind. In particular, when there is a global crisis money tends to flow to the USD and GBP drops which can be in the UK based US investors favour.

When you hold a currency hedged version of a fund the fx variation is removed from the equation and you will more closely track the underlying index but there is typically a small uptick in fees for the currency hedging.

Yeah Aviva is a little cheaper for the HSBC Islamic fund at 0.46%, other index funds are lower on Aviva at 0.16%, so 0.3% more expensive but it does perform well so not the end of the world but worth keeping an eye on.

@GazzaBloom ah ok so if I follow, the GBP that you invest in the fund is converted to USD and vice versa if you sold, so depending on the rate at sell time you could get more pounds if GBP was stronger?

Are there always hedged versions of funds available on some platform then? 

isayhello

Hoenir said:

isayhello said:

 can anyone share tips for how they approach funds in this scenario or in a more general way (as I'd like to use this approach for an ISA too if the general sites and tools can be used).

Read, watch, listen ,attend and follow.  The wider and more diverse the content the better. To make a judgemental call the more informed you become, the less lightly you'll make a decision you later come to regret. 

@Honeir thanks, thats what I'm hoping to do, just wondered if there are some recommended resources people always check when researching a new fund or share which I could consider.