Lack of clear performance data for managed funds?

dlevene

I was about to make an additional contribution to my Nest workplace pension before the tax year was out, but it occurred to me that I should have a look around at what private pensions were available.

I'd be interested in one of the managed funds - PensionBee, Wealthify, Nutmeg, and then the ready-made funds from some of the more traditional platforms. And while there's a lot of comparison info regarding fees etc (and it has driven home how expensive Nest is...), it strikes me that there's a real lack of clear data for how these products have performed, both in absolute terms and relative to one another.

Is it just me? Am I looking in the wrong place, or misunderstanding something? I get that it's complex, and some of them are quite new, but how are people supposed to make an informed decision on what to go with when it's not possible to see how they've performed...?

Sarahspangles

With these types of personal pension, it is the funds that perform, and you choose the funds.

There is no guarantee that funds will continue to perform as they have in the past, what is also relevant when you choose is the risk profile and charges that are taken from the fund. Some of the charges may go towards the salary of a fund manager who decides what mix of investments to include.

You’ve listed platforms within which you can ‘store’ your funds.  They will have charges for ‘custody’ of your investments, and fees for transactions. You’re also paying for their website, help desk etc. They will arrange to get the HMRC relief on your investments and possibly pay a bit of interest if you hold some cash in your pension pot for a while.

What you’re actually making a decision about (initially) is the choice of platform, if you share how much you have to invest and whether this is monthly/one off you may get recommendations that are cost effective in terms of the platform charging structure. 

Some of the ones you have listed limit the choice of funds you can invest in. This may be a positive if you don’t want to be overwhelmed with choice, but if you just want something medium-risk from a mainstream fund, any of the platforms can offer that and most will suggest some funds that are a reasonable ‘default’ choice.

When I decided to use a Self Invested Personal Pension the real decision was whether to bother - the tax relief is more significant to me than the investment performance as I’m near retirement. So when it came to choosing funds I was looking at which funds performed marginally better than funds with a similar risk profile.

tacpot12

As you are invested using Nest, I would recommend having a look at the Sharia fund. This fund seems to be performing very well, possibly because of the careful selection of the underlying investments to ensure they stick to the Sharia principles. Don't be put off by the name. 

dlevene

Sarahspangles said:

With these types of personal pension, it is the funds that perform, and you choose the funds.

There is no guarantee that funds will continue to perform as they have in the past, what is also relevant when you choose is the risk profile and charges that are taken from the fund. Some of the charges may go towards the salary of a fund manager who decides what mix of investments to include.

You’ve listed platforms within which you can ‘store’ your funds.  They will have charges for ‘custody’ of your investments, and fees for transactions. You’re also paying for their website, help desk etc. They will arrange to get the HMRC relief on your investments and possibly pay a bit of interest if you hold some cash in your pension pot for a while.

What you’re actually making a decision about (initially) is the choice of platform, if you share how much you have to invest and whether this is monthly/one off you may get recommendations that are cost effective in terms of the platform charging structure. 

Some of the ones you have listed limit the choice of funds you can invest in. This may be a positive if you don’t want to be overwhelmed with choice, but if you just want something medium-risk from a mainstream fund, any of the platforms can offer that and most will suggest some funds that are a reasonable ‘default’ choice.

When I decided to use a Self Invested Personal Pension the real decision was whether to bother - the tax relief is more significant to me than the investment performance as I’m near retirement. So when it came to choosing funds I was looking at which funds performed marginally better than funds with a similar risk profile.

Yes, the customer chooses the fund, but most of them have a limited number of options, and a set number of risk profiles.

It should really be possible to compare the past performance of a 4/7 risk fund with one of them and a 4/7 risk fund with another, or the SRI fund with one and the SRI of another. Shouldn't it?

Money to the masses seems to have some decent analysis.

Sarahspangles

dlevene said:

It should really be possible to compare the past performance of a 4/7 risk fund with one of them and a 4/7 risk fund with another, or the SRI fund with one and the SRI of another. Shouldn't it?

Money to the masses seems to have some decent analysis.

Yes, I used Trustnet to compare similar funds. Hoping that if there was (slightly) higher performance by one, that was an indication the manager was adding value by sound or timely actions, and that would continue.

I used the Monevator tables to choose a platform tailored to my expected portfolio and frequency of trades. 

Albermarle

 And while there's a lot of comparison info regarding fees etc (and it has driven home how expensive Nest is...),

Nest charging structure is unusual . There is a 1.8% charge on contributions, whereas other providers do not charge at all. On the other hand their ongoing charge of 0.3% ( all in including fund and platform charge) is rather low.

As you are invested using Nest, I would recommend having a look at the Sharia fund. This fund seems to be performing very well, possibly because of the careful selection of the underlying investments to ensure they stick to the Sharia principles.

AIUI the sharia principles means that the fund is heavily invested in Big Tech/Magnificent 7. Hence why it has done some well recently. Maybe it will continue but some think Big Tech share prices are a bit overinflated.

It should really be possible to compare the past performance of a 4/7 risk fund with one of them and a 4/7 risk fund with another

These risk scores are a bit of a black art and rather subjective. Some platforms score on a 1 to 10 scale.

For example the well known Vanguard Lifestrategy range gives a risk score of 4 to VLS 40, 60 & 80 ( double the amount of equity as 40) 

dlevene

Sarahspangles said:

Yes, I used Trustnet to compare similar funds. 

I had a look at Trustnet, but they don't seem to list the various Nutmeg, Moneyfarm etc funds...

Monevator, again, is just fees etc rather than fund performance.

The closest I've been able to find to what I was looking for is the 5 year return table here.

I was leaning towards one of the higher-risk, ethical funds from Moneyfarm anyway, and they topped the table at 7.33% annualised return. Interestingly, this compares to 16.7% for the Nest Sharia fund . 

Maybe I'll stick with Nest after all then.

Sarahspangles

dlevene said:

Sarahspangles said:

Yes, I used Trustnet to compare similar funds. 

I had a look at Trustnet, but they don't seem to list the various Nutmeg, Moneyfarm etc funds...

Monevator, again, is just fees etc rather than fund performance.

The closest I've been able to find to what I was looking for is the 5 year return table here.

I was leaning towards one of the higher-risk, ethical funds from Moneyfarm anyway, and they topped the table at 7.33% annualised return. Interestingly, this compares to 16.7% for the Nest Sharia fund . 

Maybe I'll stick with Nest after all then.

What Nutmeg etc do is build a portfolio of funds. The funds themselves buy a bunch of stocks, bonds and cash (etc) which meet particular characteristics. Then companies like Nutmeg put together a portfolio of these funds that they have ‘designed’ to meet particular objectives. Basically a blend/mix of funds.

The value added by Nutmeg is choosing the mix of funds but you still need to decide how much risk you can tolerate in return for a potential gain. An ‘adventurous’ portfolio or fund will typically be more volatile. So a fund that has a strong return right now might dip faster in a year’s time.

If there’s some bad news about the economy in the media there will always be someone posting here that the value of their pension has fallen, and they think they should sell, because if they’d put the money in savings they’d be better off! And others who are disappointed that their returns are lower than their friend’s, despite them choosing the low risk options. So you do need to understand a bit about this stuff, to prevent panics.

dlevene

I understand all that. That shouldn't preclude clear, comparable information about past performance of the chosen portfolio.

Hoenir

dlevene said:

It should really be possible to compare the past performance of a 4/7 risk fund with one of them and a 4/7 risk fund with another, 

Providing the underlying portfolios are similar.  Often there's comparisons between oranges and apples when it comes to investment performance over recent short time frames. 

dunstonh

I'd be interested in one of the managed funds - PensionBee, Wealthify, Nutmeg, and then the ready-made funds from some of the more traditional platforms. And while there's a lot of comparison info regarding fees etc (and it has driven home how expensive Nest is...), it strikes me that there's a real lack of clear data for how these products have performed, both in absolute terms and relative to one another.

The products don't perform.  Their portfolios do.

Their portfolios are a collection of funds.  The funds have published performance but as the portfolios are not retail funds themselves, they won't.   Remember robos are not aimed at people that want the best or want the data.   They are aimed at people with relatively small values who want an app.

You say NEST is expensive but robos are far more expensive.

I had a look at Trustnet, but they don't seem to list the various Nutmeg, Moneyfarm etc funds...

That is because not of those you mention have funds.

I understand all that. That shouldn't preclude clear, comparable information about past performance of the chosen portfolio.

Different target market.  It sounds like you want a SIPP and to pick a multi-asset fund (or global tracker).    However, you are looking at Robos which isn't really aimed at what you are after.