which funds within dc pension

tiger135

I have two pension pots, about a year ago they were both about 10k.
my standard life one has hundreds of funds so i chose vanguard global ex uk, which has grown to 14k.
my current job pension is still 10k and its invested in a default life cycle option.
its managed by scottish widows and there are only 12 funds.
here they are : 
https://digital.feprecisionplus.com/corppen?&category=6rmd79
if anyone has any spare time to look, would you recommend which of these funds? 

Marcon

tiger135 said:

I have two pension pots, about a year ago they were both about 10k.
my standard life one has hundreds of funds so i chose vanguard global ex uk, which has grown to 14k.
my current job pension is still 10k and its invested in a default life cycle option.
its managed by scottish widows and there are only 12 funds.
here they are : 
https://digital.feprecisionplus.com/corppen?&category=6rmd79
if anyone has any spare time to look, would you recommend which of these funds? 

Without knowing anything about you, it's impossible to comment helpfully. How old are you? When do you plan to draw your benefits? Annuity or drawdown? What's your attitude to risk...?

QrizB

Just as an observation, "passive global equity" has measurably outperformed "active global equity" in every year for the past five years.

tiger135

I am just over 40 so my funds wont be available for 15-20 years.
Happy for the risk, as I said my other pot has 100% vanguard global index fund ex-uk.
The passive global equity I guess is closest to that, but I also noticed the ethical fund has done well, and so did the shariah.

dunstonh

Happy for the risk, as I said my other pot has 100% vanguard global index fund ex-uk.

And what fund do you have for your UK allocation?

The fund you have is really aimed at those that want to control the level of home bias.  Its not mean as a standalone fund that you go 100% into.

jamesd

Their Active Global Equity fund doesn't seem to have done well compared to their passive version, as QrizB observed.

Blended didn't do too horribly. Ethical did quite well compared to its benchmark. Sharia did quite well against both its benchmark and overall and it might well be my choice from that range.

I'm unimpressed by the SW options but you can diversify across different pots as long as you can find something worthwhile in each.

JohnWinder

Firstly, the jargon is asset allocation, meaning how much of which assets do you invest in. Assets include individual stocks or bonds, cash accounts, stocks of UK or elsewhere, etc. Assets allocation is a major determinant of your returns, both how well and how poorly they may do, so books have been written on how to think through your choices. W Bernstein has one, R Ferri has another, and a UK focussed book like Hale’s Smarter Investing covers it including: ‘Choosing this mix is the first step towards smarter investing. It is a function of your emotional ability to suffer losses, ..and the need you have to take risk to achieve the returns you need…’

You didn’t give us much to work on to advise you on asset allocation, nor is it easy for anyone to come up with the best answer without repeated reflection and re-evaluation.

‘"passive global equity" has measurably outperformed "active global equity”. ....‘the ethical fund has done well, and so did the shariah. ......‘doesn't seem to have done well compared to ‘ ....... Blended didn't do too horribly.’

We need to be very careful drawing conclusions from past performance data.
Past returns are always interesting, and very informative about what happened in the past - how well did it do; how often did it scare me; what’s the worst it was capable of; should I have chosen something different?
But I don’t think it has anything reliable to tell us about the future when comparing funds, and the less so if we’re comparing rather different products.
Past performance does not guarantee future performance; how often is that written on a fund sheet?
Firstly, we’re looking at 5 years of performance in this thread. Unless what happens over 5 years will tell you what will happen over 30 years, a realistic investment time frame, what is the point? Can anyone point to 5 year data from the past that predicted 30 year data?
Secondly, long term return data has its own problem that there aren’t that many separate long term periods for which there is accurate return data with which to calculate accurate averages etc.
Thirdly, there’ll be plenty of 10 year periods during which bonds outperformed stocks. Does anyone seriously think that’s makes bonds a better returning long term investment than stocks? No way. Checking, from 1993 to 2013 stocks and bonds had very similar returns, but in the next 10 years stocks outperformed by a factor of 4.  https://www.portfoliovisualizer.com/backtest-asset-class-allocation#analysisResults
Fourthly, if you’re comparing active funds returns there is research suggesting you’d be better off choosing the worse funds than the better ones for the future. Quote: ‘..the authors find that investors who chose managers with poor recent performance earned higher benchmark-adjusted returns than those who chose managers with superior recent performance. Their findings pose a challenge for asset owners: If past performance is used at all in selecting managers, it is the best-performing managers who should be replaced, not the underperforming ones.

Does Past Performance Matter in Investment Manager Selection?    Bradford Cornell, Jason Hsu and David Nanigian.  The Journal of Portfolio Management Summer 2017 https://jpm.pm-research.com/content/43/4/33

And quote: ‘…from a practical or decision-making perspective, it reinforces the notion that choosing between active funds on the basis of previous outperformance is likely a misguided strategy.’

https://www.spglobal.com/spdji/en/spiva/article/us-persistence-scorecard

Having decided on your asset allocation, there are much better criteria to use to decide which fund to invest in than past performance.
The product sellers might like past performance because they can point to any number of extraneous causes if it doesn’t persist - ‘not my fault’.  Don’t be seduced by it.