Pension performance

YoungSaver20

Just wondering for those with a defined contribution pension, how is it performing, do you choose the funds you invest in?

I have so far contributed £64,000, over 95 % of that in the past 7 years then smaller amounts in the past with a lot of years opted out.

Total gain is 24 % - almost £80,000 pot…so about average of 3.5 % a year. 

What does everyone have, any examples of what you are invested in. Mine is an l and g - and I have selected 7 different funds to distribute my contributions.

Marcon

YoungSaver20 said:

Just wondering for those with a defined contribution pension, how is it performing, do you choose the funds you invest in?

I have so far contributed £64,000, over 95 % of that in the past 7 years then smaller amounts in the past with a lot of years opted out.

Total gain is 24 % - almost £80,000 pot…so about average of 3.5 % a year. 

What does everyone have, any examples of what you are invested in. Mine is an l and g - and I have selected 7 different funds to distribute my contributions.

L&G is simply the provider of the product (ie the pension, which is a tax wrapper). It's the 7 different funds you hold which dictate the performance and you've not said what those funds are, so hard to see what this thread might achieve if others respond in similar vein!

YoungSaver20

Of course, here are the funds I have

Diversified Fund	Date of first investment  12 Nov 2021	Unit price  1,244.54p	Units held  3.561	Amount invested  £46.18	Value  £44.32	Gain or loss (£ and %) £-1.87 (-4.04%)
Fund name  L&G PMC UK Equity Index Fund G28	Date of first investment  16 Feb 2021	Unit price  2,314.70p	Units held  799.566	Amount invested  £13,002.54	Value  £18,507.55	Gain or loss (£ and %) £5,534.80 (42.57%)
Fund name  L&G PMC North America Equity Index 3	Date of first investment  05 Aug 2022	Unit price  911.02p	Units held  1,816.418	Amount invested  £14,202.02	Value  £16,547.93	Gain or loss (£ and %) £2,352.14 (16.56%)
Fund name  L&G PMC Fossil Fuel Free Climate Equity Index 3	Date of first investment  05 Aug 2022	Unit price  1,281.46p	Units held  627.396	Amount invested  £7,101.02	Value  £8,039.83	Gain or loss (£ and %) £941.92 (13.26%)
Fund name  L&G PMC BNY Mellon Global Income 3	Date of first investment  05 Aug 2022	Unit price  1,540.59p	Units held  984.127	Amount invested  £14,202.01	Value  £15,161.36	Gain or loss (£ and %) £965.67 (6.8%)
Fund name  L&G PMC UK Smaller Companies 3	Date of first investment  05 Aug 2022	Unit price  648.80p	Units held  1,074.858	Amount invested  £7,101.02	Value  £6,973.68	Gain or loss (£ and %) £-124.44 (-1.75%)
Fund name  L&G PMC World Emerging Markets Equity Index 3	Date of first investment  26 Jul 2022	Unit price  1,710.92p	Units held  836.122	Amount invested  £14,136.69	Value  £14,305.38	Gain or loss (£ and %) £174.80 (1.24%)

dunstonh

That is a strange mix of funds.  Is there any structure to the selection or is it random hit and hope?

i.e. a mix of conventional and responsible - why?  (responsible funds tend to underperform conventional)
Very High weighting to UK (which has been a poor area to invest in for a very long time - even more so for small and mid caps post Brexit).
High in emerging markets (which have largely been off the boil for a while).
Low in US equity (which has been the main growth area for the last 15 years).

Its like the funds have been plucked out of a hat and a random amount added with no process and structure.   That is usually a recipe for lower returns.

  

SVaz

Just one or two funds would perhaps serve you better,  a Global equities fund and a mixed asset one,  especially if you are young. 
I wouldn’t be happy with an average 3.5% annual return over the last 7 years.
My funds range from an av.  12% for a Global index fund to 8% for a volatility managed mixed asset fund (60% equities) over the last decade.  

YoungSaver20

dunstonh said:

That is a strange mix of funds.  Is there any structure to the selection or is it random hit and hope?

i.e. a mix of conventional and responsible - why?  (responsible funds tend to underperform conventional)
Very High weighting to UK (which has been a poor area to invest in for a very long time - even more so for small and mid caps post Brexit).
High in emerging markets (which have largely been off the boil for a while).
Low in US equity (which has been the main growth area for the last 15 years).

Its like the funds have been plucked out of a hat and a random amount added with no process and structure.   That is usually a recipe for lower returns.

  

I did choose these, just as a hunch that they might do well as a mixture of high risk funds and medium risk - but clearly they aren’t so thinking of a reshufflle and choosing different investments 

I add a huge amount of my salary each year to pension (about 48 % with employer contributions) - so feel it should be performing better.

QrizB

SVaz said:

Just one or two funds would perhaps serve you better,  a Global equities fund and a mixed asset one,  especially if you are young. 
I wouldn’t be happy with an average 3.5% annual return over the last 7 years.

VLS60 (an unremarkable middle-of-the-road 60% equities fund) is up 29% over the past 5 years. Roughly 5% pa average, although there have been good years and bad ones.

YoungSaver20 said:

I have so far contributed £64,000, over 95 % of that in the past 7 years then smaller amounts in the past with a lot of years opted out.

Have you contributed similar amounts each year for the past seven years?

YoungSaver20 said:

Total gain is 24 % - almost £80,000 pot…so about average of 3.5 % a year.

Yes, but (if you've been adding say £8k per year for seven years) you've only had £64k invested for 12 months. Your internal rate of return could be double that "average".

Put another way, if you'd had £64k in the pot for the full seven years, it might be worth almost £100k by now.

SouthCoastBoy

If you are still contributing over the last 7 years, your annualised return will need to take that into consideration

YoungSaver20

Good point, for the first 3 years, it was smaller amounts - £145 a month to start then I increased it 2 years later to about £200, then £400 later in 2019. Then from early 2020 it has been £1000 a month it’s currently £1467 a month.

So you are right the percentage would be higher -I think I worked out of the £64,000, about £58,000 was from the last 4 years.

dunstonh

I add a huge amount of my salary each year to pension (about 48 % with employer contributions) - so feel it should be performing better.

Don't take this the wrong way, as it's not meant as a criticism, but you are the weak link in its performance.   You turned yourself into an investment manager and managed to miss all the major growth areas whilst investing more heavily in the weaker areas.

You are not alone in doing this.  So, your takeaway from this is don't try to be an investment manager when you don't know what you are doing.    Look for the multi-asset funds or the global tracker that your pension fund offers and stick with that.  

DavidAC

Looks like you are doing very well. Four years ago you only had £64K - £58K = £6K plus maybe a bit of growth. Most of that £64K has had less than 4 years to grow to 80K.

L&G PMC UK Equity Index Fund G28  42% gain in about 3 years.
L&G PMC North America Equity Index 3  16% gain in 1.5 years.
L&G PMC Fossil Fuel Free Climate Equity Index 3  13% gain in 1.5 years.

My UK Equity Aviva UK Equity AP Fund factsheet | Trustnet has only done 25% in 3 years. Most of that gain was from about October 2022 over a period of less than a year, since then hardly any gain at all. I am in the process of moving out of it. L&G PMC UK Equity Index Fund G28 has also gone flat.