NEST Sharia - changes to fund.

Aretnap

Andy_L said:

Arguably there's a bit of theological/financial sleight of hand in some Sharia products to make what would otherwise be interest by any secular measure look like an investment return instead

Indeed, and it's probably quite telling that the "profit" on Sharia back accounts is taxed as interest,  rather than capital gains, dividends or whatever. As someone once said, you might persuade God that it's not interest,  but the taxman is not so easily fooled. 😉

dlevene

Just got an email from Nest informing me that they're changing the Sharia fund from 100% equities to up to 30% "sukuk" (Sharia-compliant bonds).

This removes what made the Sharia fund such an attractive choice and leaves those of us who have to use Nest for workplace pensions without a 100% equities, long term growth option.

I've complained but don't hold out much hope...

MSE_ForumTeam5

@dlevene - we've merged your post into the ongoing thread on this topic

dunstonh

This removes what made the Sharia fund such an attractive choice and leaves those of us who have to use Nest for workplace pensions without a 100% equities, long term growth option.

It actually makes the fund much more attractive to the average person as it was far too high risk for mainstream provider with limited fund choice.

I've complained but don't hold out much hope...

You are an outlier.   Most people would not come close to your risk level and Nest is geared for the mainstream and not outliers.

dlevene

MSE_ForumTeam5 said:

@dlevene - we've merged your post into the ongoing thread on this topic

Apologies for starting a new thread inappropriately - I did have a look for an existing thread but didn't see one recently (and I only just got the email from them)

dunstonh said:

It actually makes the fund much more attractive to the average person as it was far too high risk for mainstream provider with limited fund choice.

You are an outlier.   Most people would not come close to your risk level and Nest is geared for the mainstream and not outliers.

Clearly there are a number of people in this thread and in other forums that agree with me!

Being much more strongly geared towards equities is typical for many people earlier on in their career.

SteveSi

AFAIK Nest do not allow partial transfers to a different pension provider (e.g. once a year), so if you are in a Nest workplace pension scheme paid into by your employer, this change means you now have no way to invest 100% in equities and still keep your employers contribution. Some might argue it would be worth opting out of the Nest workplace scheme and contributing to your own SIPP instead and miss out on the 3% employers contribution.
Surely, it should be made law that workplace pension providers must allow partial transfers?

dunstonh

Clearly there are a number of people in this thread and in other forums that agree with me!

Still in a tiny minority.

Being much more strongly geared towards equities is typical for many people earlier on in their career.

True but the Sharia fund was far too high risk in doing that.     Nest's fund range is very weak and a better 100% equity option should be there.

penners324

Have already switched funds out of the Sharia fund.

Linton

dlevene said:

MSE_ForumTeam5 said:

@dlevene - we've merged your post into the ongoing thread on this topic

Apologies for starting a new thread inappropriately - I did have a look for an existing thread but didn't see one recently (and I only just got the email from them)

dunstonh said:

It actually makes the fund much more attractive to the average person as it was far too high risk for mainstream provider with limited fund choice.

You are an outlier.   Most people would not come close to your risk level and Nest is geared for the mainstream and not outliers.

Clearly there are a number of people in this thread and in other forums that agree with me!

Being much more strongly geared towards equities is typical for many people earlier on in their career.

The problem with the Sharia fund as was is not that it invested 100% in equities but rather that the allocation to different types of equities was skewed towards the higher risk sectors in the market far more than you would normally find with say a global index fund.

That looked fine and would have attracted naive investors during the past few years when tech outperformed everything else but come the next crash there would many complaints when the fund seriously underperformed.

Ivkoto

Linton said:

dlevene said:

MSE_ForumTeam5 said:

@dlevene - we've merged your post into the ongoing thread on this topic

Apologies for starting a new thread inappropriately - I did have a look for an existing thread but didn't see one recently (and I only just got the email from them)

dunstonh said:

It actually makes the fund much more attractive to the average person as it was far too high risk for mainstream provider with limited fund choice.

You are an outlier.   Most people would not come close to your risk level and Nest is geared for the mainstream and not outliers.

Clearly there are a number of people in this thread and in other forums that agree with me!

Being much more strongly geared towards equities is typical for many people earlier on in their career.

The problem with the Sharia fund as was is not that it invested 100% in equities but rather that the allocation to different types of equities was skewed towards the higher risk sectors in the market far more than you would normally find with say a global index fund.

That looked fine and would have attracted naive investors during the past few years when tech outperformed everything else but come the next crash there would many complaints when the fund seriously underperformed.

Well the next crash can only be a great news for anyone, who is drip feeding every month ( almost every employee ). Also I doubt there'll be many, who want to be on this fund with less than 5-7 years investment horizont. So the choice of how everyone wants to invest their money must be down to the people, not the pension provider!