'Home Bias' and Aegon Adventurous Tracker (Flexible Target) (ARC)

engagedandopen

Does anyone here understand what the latest IGC report refer to as the 'design' behind the Aegon Adventurous Tracker, in terms of tracking 50% the FTSE All-Share and 50% Overseas Developed Markets, please?

I know people often say 50% home bias is too high (presumably mainly looking at global market cap), but the fund is the cheapest tracker arrangement I think I can get, at 0.23% all in (0.18% platform charge + 0.05% AMC) - so cheaper than both Nest and Vanguard.  I'm guessing the design considerations might revolve around balancing currency swings and small, mid and high caps, value and growth, and the fact that a lot of the UK blue chip companies garner earnings from overseas.

I'm trying to decide whether the home bias is tolerable given the low cost, or whether it would be better to pay, say, 0.15% AMC for the (insured) Aegon HSBC Developed World Sustainable Equity (ARC) Pn fund - a global tracker - and then blend it into the Aegon Growth Tracker (Flexible target) closer to pension access (which currently has about 30% in the HSBC fund).

Thank you.

dunstonh

Does anyone here understand what the latest IGC report refer to as the 'design' behind the Aegon Adventurous Tracker, in terms of tracking 50% the FTSE All-Share and 50% Overseas Developed Markets, please?

IIRC it is just a software based combination for two BlackRock funds.  effectively a fund of funds and 50/50 is just for simplicity of marketing.

I'm trying to decide whether the home bias is tolerable given the low cost, 

Do not put charges ahead of where you invest.  Charges are secondary. Where you invest is primary.   For the sake of a few basis points you can get a global tracker without the home bias.

UK equity has been top once in the last 25 years.  Nobody knows the future, but do you think that UK equity is going to be king for more than half the years in the future?

 or whether it would be better to pay, say, 0.15% AMC for the (insured) Aegon HSBC Developed World Sustainable Equity (ARC) Pn fund - a global tracker - and then blend it into the Aegon Growth Tracker (Flexible target) closer to pension access (which currently has about 30% in the HSBC fund).

Historically, sustainable funds underperform conventional investing.     As you are considering non-sustainable investing, why would you pivot to a sustainable fund?

engagedandopen

Thank you for taking the time to reply, Dunstonh, with you recollection that the 50/50 tracker split is more for marketing simplicity than strategy.  The IGC didn't refer to its performance in those terms!

Aegon has already started replacing 20% of the UK tracker component with a Blackrock ESG tracker, and the Aegon Growth Tracker has 30% in the HSBC fund, so it would blend more smoothly anyway than saving 2-3 basis points on a traditional Fidelity or HSBC global tracker.

More broadly, most of my DC investments are in the Nest Higher Risk fund now, I have the Aviva Stakeholder Pension for actively managed ethical investing through Liontrust (so this would make a cheaper, passive alternative as a balancing strategy) and I currently have shares in Shell, BHP and Woodside Energy directly in my AJ Bell SIPP.  It's mainly the gambling and tobacco companies that I prefer to avoid, rather than the recent and abrupt knee-jerk disinvestment of energy shares as we transition to more sustainable sources.

engagedandopen

11-12 basis points for a global tracker (Fidelity, HSBC or L&G) on the ARC platform with 18 bps platform charge would be less competitive than the 30 bps I am paying for Nest.

So, I think I'll use their Select Growth Plus Multi-Manager fund (< 1% all-in and insured) until I decide the workplace default/Aegon Growth Tracker at 5 bps is an appropriate asset allocation (i.e. closer to retirement).

Thanks again for replying.