Is Your SIPP Pension Making Any Money?

dunstonh

Roger175 said:

Also, why are all but one of those funds income as opposed to accumulation? (assuming I'm reading it correctly). Maybe I've missed something here, but I had always assumed one would invest primarily in accumulation funds during the accumulation period (ie, prior to commencing drawdown)

No. That is an incorrect assumption.    The income can be reinvested to buy new units and act as a natural rebalancer or buy units in the same fund depending on the portfolio configuration (usually platform software settings).  

An ACC unit vs INC unit with income reinvested in the same units gives an identical return.

Roger175

dunstonh said:

Roger175 said:

Also, why are all but one of those funds income as opposed to accumulation? (assuming I'm reading it correctly). Maybe I've missed something here, but I had always assumed one would invest primarily in accumulation funds during the accumulation period (ie, prior to commencing drawdown)

No. That is an incorrect assumption.    The income can be reinvested to buy new units and act as a natural rebalancer or buy units in the same fund depending on the portfolio configuration (usually platform software settings).  

An ACC unit vs INC unit with income reinvested in the same units gives an identical return.

OK, fair enough, actually that makes me feel a bit better, because I have accidentally bought Inc funds in the past and treated this as a mistake .

I'm very familiar with the concept of re-balancing, I hold a substantial portfolio of individual shares and never have the dividend's automatically reinvested, choosing to use these to rebalance. 

Roger175

dunstonh said:

Not much wonder you think investing is complex looking at that portfolio.  The illusion of complexity is perhaps intentional?

Nothing complex about that MPS.

 I quickly counted 20 in your list.  As I say, no wonder you perceive it as complex.  Perhaps I don't know what I don't know?

20 is not a lot.     Its similar to the DIY favourites Vanguard Lifestrategy and other multi-asset funds.   Unless yo consider those complex too?

That's just bonkers, what is this, a competition to see how many different fund providers one can possibly get into a client's portfolio before they start asking questions (I'm not joking, that looks like a !!!!!! take). You should be asking your FA to explain his strategy. Quite clearly it isn't working, it actually looks just like the pot-luck random picking approach that I was referring to earlier in this thread. I would be looking to ditch the FA and rationalise that lot back to a small handful of low cost trackers.

You cannot build a structured portfolio with a handful of low-cost trackers. You can get the number down a bit, but it's usually cheaper to stick to single-sector funds than to use a global tracker. Plus, with bonds and fixed interest, there isn't a single bond fund that gives diversification across all types.   So, you normally have to diversify across multiple bond funds to get all types covered.

Do you think funds like Vanguard lifestrategy or HSBC global strategy are bonkers?

Dunstonh, so you would defend that portfolio would you? You give so much incredibly useful advice on this site and on the whole I agree with you wholeheartedly, but you have a habit of trying to defend the indefensible when IFA's are criticised. There are plenty of DIY investors who have done very well using a handful of low cost trackers, certainly most have outperformed this poor gentleman's portfolio by a country mile.

mad1_2

So, I have a review with the IFA sometime in mid August. 

My core question, is why has my pension made under 1% of growth during the period I have mentioned?

What other core questions should I be asking them?

Please bear in mind (which I'm sure you understand now) I have no knowledge of investing so there would be little point me asking complex investment questions which I wouldn't know how to respond to the answers given.

I am happy to increase my risk a little, but I am a little concerned that if their fundamental approach is ineffective that I would just be exposing my diminishing pot to more losses which I cannot afford.

Bostonerimus1

dunstonh said:

Not much wonder you think investing is complex looking at that portfolio.  The illusion of complexity is perhaps intentional?

Nothing complex about that MPS.

 I quickly counted 20 in your list.  As I say, no wonder you perceive it as complex.  Perhaps I don't know what I don't know?

20 is not a lot.     Its similar to the DIY favourites Vanguard Lifestrategy and other multi-asset funds.   Unless yo consider those complex too?

That's just bonkers, what is this, a competition to see how many different fund providers one can possibly get into a client's portfolio before they start asking questions (I'm not joking, that looks like a !!!!!! take). You should be asking your FA to explain his strategy. Quite clearly it isn't working, it actually looks just like the pot-luck random picking approach that I was referring to earlier in this thread. I would be looking to ditch the FA and rationalise that lot back to a small handful of low cost trackers.

You cannot build a structured portfolio with a handful of low-cost trackers. You can get the number down a bit, but it's usually cheaper to stick to single-sector funds than to use a global tracker. Plus, with bonds and fixed interest, there isn't a single bond fund that gives diversification across all types.   So, you normally have to diversify across multiple bond funds to get all types covered.

Do you think funds like Vanguard lifestrategy or HSBC global strategy are bonkers?

The OP's portfolio might be similar to VLS products in the number of funds it contains, but not in the performance and fees. I have no desire to work out the asset allocation of such a portfolio, but maybe others will find the correct VLSxx comparison.

While diversity is a good thing in a portfolio so that you have some uncorrelated assets I think the models are driving the industry standards to extremes. Since the early 1990s I've never had more than 5 funds in my portfolio and was able to rebalance between bonds and equities during big market fluctuations. I didn't own a bit of everything, but I did own enough to have options and to implement a basic rebalancing strategy. I'm doubtful whether or not that was the best strategy, but it was good enough. The returns of the portfolio quoted by the OP are very poor and I'd frankly be embarrassed if I was their FA/Wealth manager.

Bostonerimus1

Roger175 said:

dunstonh said:

Not much wonder you think investing is complex looking at that portfolio.  The illusion of complexity is perhaps intentional?

Nothing complex about that MPS.

 I quickly counted 20 in your list.  As I say, no wonder you perceive it as complex.  Perhaps I don't know what I don't know?

20 is not a lot.     Its similar to the DIY favourites Vanguard Lifestrategy and other multi-asset funds.   Unless yo consider those complex too?

That's just bonkers, what is this, a competition to see how many different fund providers one can possibly get into a client's portfolio before they start asking questions (I'm not joking, that looks like a !!!!!! take). You should be asking your FA to explain his strategy. Quite clearly it isn't working, it actually looks just like the pot-luck random picking approach that I was referring to earlier in this thread. I would be looking to ditch the FA and rationalise that lot back to a small handful of low cost trackers.

You cannot build a structured portfolio with a handful of low-cost trackers. You can get the number down a bit, but it's usually cheaper to stick to single-sector funds than to use a global tracker. Plus, with bonds and fixed interest, there isn't a single bond fund that gives diversification across all types.   So, you normally have to diversify across multiple bond funds to get all types covered.

Do you think funds like Vanguard lifestrategy or HSBC global strategy are bonkers?

Dunstonh, so you would defend that portfolio would you? You give so much incredibly useful advice on this site and on the whole I agree with you wholeheartedly, but you have a habit of trying to defend the indefensible when IFA's are criticised. There are plenty of DIY investors who have done very well using a handful of low cost trackers, certainly most have outperformed this poor gentleman's portfolio by a country mile.

I agree with your observation, but we always need to couch comments about the good performance of a certain strategy that worked in the past, with the idea that might not work as well in the future. As pointed out many multi-asset funds hold large numbers of funds inside them and they do ok. So while I would never hold 20 unwrapped funds in my portfolio with all the headaches of managing them, that approach can work well enough as shown in the good performance of multi-asset funds from Vanguard, HSBC etc. If the OP's quoted returns are right then it just seems that the OP's investment managers aren't as good as those at Vanguard, HSBC etc.

Audaxer

dunstonh said:

Do you think funds like Vanguard lifestrategy or HSBC global strategy are bonkers?

Vanguard LifeStrategy and HSBC Global Strategy funds both have much better returns from Feb 23 to date compared to the OP's portfolio. That could be mainly down to the high fees the OP is paying for his SIPP portfolio to be managed. If the OP did go down the DIY route, I think a low cost multi asset fund is the best way to go, especially for an inexperienced investor. There is less chance of getting it wrong compared to selecting his own funds and weightings, and no need to rebalance as that happens within the multi asset fund. 

Bostonerimus1

Audaxer said:

dunstonh said:

Do you think funds like Vanguard lifestrategy or HSBC global strategy are bonkers?

Vanguard LifeStrategy and HSBC Global Strategy funds both have much better returns from Feb 23 to date compared to the OP's portfolio. That could be mainly down to the high fees the OP is paying for his SIPP portfolio to be managed. If the OP did go down the DIY route, I think a low cost multi asset fund is the best way to go, especially for an inexperienced investor. There is less chance of getting it wrong compared to selecting his own funds and weightings, and no need to rebalance as that happens within the multi asset fund. 

I don't have the inclination or stamina to work out the overall asset allocation of the OP's portfolio and without knowing that I don't thing we can make good comparisons with similar multi-asset funds. However, even Vanguard's most conservative VLS20 fund has returned 6% since Feb 2023 and beaten the OP's portfolio. As long as your portfolio is performing to your plan and expectations I don't think there's much to be gained by comparing it with other portfolios as then you get drawn into a "what if" and "regret" cycle. But in the OP's case the performance is causing some worries and might be negatively impacting their plans so some revisions might be necessary.

Ibrahim5

For the last 30-40 years my relatives have been investing with an IFA. They look down on me as a DIY investor. They love to say "we are cautious" as though they are really clever. The last time I spoke to him he had ditched the adviser and took the cash. "Every time I saw the adviser he told me I had lost more money". Obviously an adviser needs to listen to his clients but I have the feeling that the adviser had never really explained that being cautious isn't always very clever. He had never told them that being cautious for 40 years may restrict their pension growth.

dunstonh

Dunstonh, so you would defend that portfolio would you?

I haven't analysed the structure closely and was not defending it but there is certainly nothing wrong with the number of funds.   That is what I was defending.

but you have a habit of trying to defend the indefensible when IFA's are criticised.

How is it indefensible?
Hopefully, the OP will tell us who the DFM is and what portfolio it is.    It looks like an income portfolio but income portfolios have been out for fashion for a while but that cycle will change at some point. 

Also, as an observation, given that it is heavily in income, the returns being declared on the platform screen may just refer to unit price and not the income generated.   There is not enough platform cash for yield not to be reinvested.   So, either it is being withdrawn or it is buying new units.   If it is buying new units, this can artificially lower the investment return figure shown by the platform as it treats the cash being invested as nerw money.  So, the op could be understating the actual return.     

Going by the amount invested on day 1 and current value would probably be a safer measure.  The date would be useful as well as February 2023 had a fairly large drop (by monthly standards).  So, if it was before the drop, that would have held it back. If it was after the drop, then it makes the figures worse.

 There are plenty of DIY investors who have done very well using a handful of low cost trackers, certainly most have outperformed this poor gentleman's portfolio by a country mile.

Short term performance is no indication of long term performance.   Recent years have favoured trackers.  Especially those that bias their portfolio to US or tech in general.    The first decade of this millennium saw US equities as one of the worst areas to invest and was negative over a decade.    This cycle has been the opposite.     Care needs to be taken that the handful of trackers do not have a bias to recent trends without understanding that things will change.

Since Nov 2021, bonds have been dire.  Some more than others.   Going too light on diversification on bonds just to keep the fund count down is not a good idea.