Sharia Fund - Nest pension

samps1973

Hi,

Currently my workplace/private pension is in the nest Sharia Fund.

Although over recent years the fund has done very well. The last week or so there have been some big drops. Today 25/07/24 it actually dropped by 2.73% 😳.

In one of my other posts it was recommended to change to the Sharia fund as the Nest standard 2040 wasnt really performing very well. I changed about 6 weeks ago. My pot has dropped from 69k to about 64.5k so a big drop.

I'm 51, so awhile before I retire.

I'm not sure whether i should hold out as i understand that investments can fluctuate but the drops another 2% about a couple of weeks ago are a bit worrying.

What are your thoughts and suggestion on this? Is there a point where I should pull out or just grin and bare it?

Have any of you guys noticed the drop?

Thanks

dunstonh

Although over recent years the fund has done very well. The last week or so there have been some big drops. Today 25/07/24 it actually dropped by 2.73% 😳.

That is to be expected.

In one of my other posts it was recommended to change to the Sharia fund as the Nest standard 2040 wasnt really performing very well. I changed about 6 weeks ago. My pot has dropped from 69k to about 64.5k so a big drop.

That is not a big drop. Indeed, its pretty routine.  Just you wait for a major crash to occur.  You are talking about it going down by half or more.

I'm not sure whether i should hold out as i understand that investments can fluctuate but the drops another 2% about a couple of weeks ago are a bit worrying.

If you are worried about 2% drops then being in a fund with the possibility for 60-70% drops is not the place for you.

Have any of you guys noticed the drop?

Noticed it and ignored it as its irrelevant.   

penners324

It's not paying out for a decade and you're worried about what's happening over 6 weeks?

Just leave it. 

penners324

It's still 20% up from the start of the year, when I switched to it.

samps1973

Hi guys,

Sorry to bring this back up again but I'm sure some of you have noticed that the Sharia fund is dropping quite a bit and I have taken on board the comments above.

Over the last few months including my workplace pension I contribute roughly £800-£1,000 per month in total to the Sharia fund. It seems that all the contributions i have been making are being lost due to the recent drops. I think the Sharias performance over the past year is about 18% now but I feel it could go either way. The fund grew to 70k at one point and is now 63k. I know you dont lose money until you sell but the pot is shrinking even though I'm paying in so much.

Just looking for opinions on what to do.

As I have approximately 15 years to retirement ,hold tight and keep contributing the 1k per month to the Sharia fund which  is invested into 90 companies. With a higher risk?

Or 

Transfer to the 2040 fund as there is 1k per month going in so it will grow quite quickly anyway and less risk of losing what I contribute and the fund invests in 2,300 companies and is more diversified.

Sorry, if these options seem obvious to some of you but at the moment I'm not sure what to do.

I've thought maybe having a cut off point of 60k then changing to the 2040 fund but not sure if I should look at it this way.

Thanks

noclaf

I am invested in the HSBC Sharia fund in my work pension albeit roughly 30% of overall 'pot' and similar-ish timeframe to retirement....my approach with these volatile funds is to just ride out the peaks and troughs...if the fund price drops then great as allows you to purchase more units of the fund with your £800-1k...and hopefully when the funds price goes up again (long term) you should benefit....this is all based on assumptions of course. Alternatively if the Sharia fund is too volatile for you (and you end up constantly dipping in and out) then consider an alternative fund(s).

For context I use similar volatile/concentrated US/Tech focussed funds in my SIPP however much smaller allocations as don't tend to trade often or buy monthly...it's a fairly static account so not being able to take advantage of pound cost averaging and hence bit more wary....whether that's a sensible strategy only time will tell.

dunstonh

The fund grew to 70k at one point and is now 63k. 

Still very small losses and not a patch on the size of a loss you will see in that fund sooner or later.

Its one of the highest risk funds going. It really has no place on a workplace pension other than for religious reasons.   It wouldn't be so bad if Nest allowed you to mix and match options.

The bottom line is that you are in a fund that can sky rocket one year and really plummet, like nothing you have seen, the next.  If that isn't for you, then you need to adjust.

Linton

Sharia funds can be poorly diversified because many investments are banned so what remains is highly focussed in a small number of sectors, particularly Tech. 

samps1973

Thank you for the replies.

I have just changed back to the standard 2040 fund for peace of mind. Lesson learned!!

While researching various pensions out there I read that the 2040 fund isnt that great due to performance.

Theres so many pensions to choose from. The nest is good because of the ease of use and to check now and again.

My ex partners parents swore by the legal and general pension back in the day but not sure if that has changed.

I have about 15 years to retire.

Are there any decent pensions i should look into as an improvement over the 2040 fund?

Thanks

dunstonh

Theres so many pensions to choose from. The nest is good because of the ease of use and to check now and again.

Virtually all modern pensions have online access.   Nest is good for an employer.   Not so good for an employee.

My ex partners parents swore by the legal and general pension back in the day but not sure if that has changed.

L&G haven't offered a good individual pension for about 20 years.   They have almost pulled out of the individual market.   They have been focusing on workplace pensions.  Often they are quite well discounted and have a better investment selection than Nest, but their admin is old fashioned.   

Are there any decent pensions i should look into as an improvement over the 2040 fund?

If its your workplace pension, you don't get the choice.  Your employer chooses it.

samps1973

Thanks for the reply.

The nest pension is my workplace pension but I also transferred in from a private pension and is now 63k. Am I not able to find another, better private pension and transfer say 99% from my nest account so the workplace pension is still in place? If so, can you recommend any good ones please.

Hope that makes sense.

Thank you