Aviva "Designer Pension" GPP - funds to mirror all world/global

gravel_2

I've been turning my attention to the pension recently. I've consolidated and been paying into this one for 5 years on default. Looking to move out of the default 40-85% fund I'm in. Hoping to mirror a global equity fund. My problem is that the options on the system are a bit awkward. I do not have the broadest of options. Does anyone have a configuration they recommend?

I would prefer to avoid the "AI Screened" funds if possible. Options:

A. International Index Tracking (FTSE World (Developed and Advanced Emerging)) or  BlackRock World (ex-UK) Equity Index (FTSE Developed with custom ESG slant)
B. UK FTSE all share Index + (potentially) UK Small cap
C. BlackRock Emerging Markets Index Tracker (MSCI Emerging Markets Index).

Finding particular holdings for these funds has proven difficult but basing it on what I can find as the underlying indices I have made a spreadsheet where I can compare the exposure to various countries vs FTSE All-World based on different allocations to the three funds options. (roughly 85% A, 10% B and 5% C). This roughly matches up but there are discrepancies as A options are FTSE and option C is MSCI (which means either a crossover between advanced emerging and emerging categories or certain MSCI emerging countries are categorised as developed by FTSE) there are certain over/under allocations.

Namely likes of Korea, Malaysia, Mexico get nearly double the allocation and China and India look shy.

Any recommended fund mixes for this particular pension? Am I over thinking this?

dunstonh

Finding particular holdings for these funds has proven difficult 

It is actually quite easy with as it tells you the benchmark and both FTS and MSCI tell you the make up.

Ideally, you shouldn't mix and match MSCI with FTSE. In some areas, it doesn't matter much. However, it does with Europe, Asia (except Japan), and Emerging Markets.

If you are using OEICs, its probably easier to stick with FTSE benchmarked funds as only Israel would end up the missing country.  ETFs give you more choice with MSCI or FTSE.  Pension funds on group schemes can limit your options but an all world tracker is usually available or enough funds to make the right combo.

gravel_2

Thanks - yes I used the underlying index to figure out what is in them. The "custom screened" funds are bit more opaque. I understand Aviva has a list of categories that would lead to exclusion but I couldn't find a list of companies that are actually excluded. Likely doesn't affect the country % much anyway.

Unfortunately I cannot see a low cost FTSE emerging market fund in the fund selector. This is all I have available to me and all use an MSCI index. On the non-emerging side it's all FTSE (either Developed or World). That's the reason for my post.

cloud_dog

In my (limited) experience it is rare for (workplace) pension providers to offer any EM funds.

JohnWinder

Not sure what you've moving out of so I'll ignore that aspect of it. As to how to mirror something very broad, it's a good first pass consideration but you'll need to decide if the complexity is worth it.

5% in C the EM tracker. Imagine the impossible, and it consistently beats the others by 1%/year (likely associated with more risk), then you've achieved 5% of 1%/year better returns than without it, ie by 0.05%/year. Is it worth the bother even if the fund charges were the same?

Small cap needs the same consideration; it probably just doesn't matter.

Ferri describes four stages in the education of an index investor: born in darkness, discovers indexing, overcomplicated everything, embraces simplicity. You'll know the right balance.