SJP Portfolio value drop

concernedfriend137

Hi. 

I was hoping for a little guidance on the following situation. 

My partner has a medium/high risk portfolio with SJP. At the beginning of February this year it was approximately £535k. Her fund manager advised withdrawing some £20k from the pension as it could be tax free. The pot has been dropping in value and, as of yesterday, is down to £450k. 

That loss has caused my partner to have sleepless nights but conversations with her fund manager are doing little to put her mind at rest. 

I know things are volatile at the moment but this still seems extreme. I asked ChatGPT if this loss could be explained by the current market and it said a 12% to 13% loss was more than should be expected. It suggested requesting a breakdown of the portfolio from SJP and getting advice from an independent financial advisor. 

I don’t want to suggest this to my partner and cause more panic but I’m not sure burying her head in the sand is the answer either. 

I welcome any input on the financial situation and/or the emotional dilemma. 

Many thanks

wmb194

concernedfriend137 said:

Hi. 

I was hoping for a little guidance on the following situation. 

My partner has a medium/high risk portfolio with SJP. At the beginning of February this year it was approximately £535k. Her fund manager advised withdrawing some £20k from the pension as it could be tax free. The pot has been dropping in value and, as of yesterday, is down to £450k. 

That loss has caused my partner to have sleepless nights but conversations with her fund manager are doing little to put her mind at rest. 

I know things are volatile at the moment but this still seems extreme. I asked ChatGPT if this loss could be explained by the current market and it said a 12% to 13% loss was more than should be expected. It suggested requesting a breakdown of the portfolio from SJP and getting advice from an independent financial advisor. 

I don’t want to suggest this to my partner and cause more panic but I’m not sure burying her head in the sand is the answer either. 

I welcome any input on the financial situation and/or the emotional dilemma. 

Many thanks

After the £20k w/d, £515k to £435k is 15.5%. If it was biased towards US equities this sounds believable. Panicking isn’t usually the best idea.

gravel_2

12-13% seems about in line with the fall in global stocks index since Feb.

In general it's a good idea to know what you are invested in so that part of the AI's advice is probably a good idea...

Albermarle

My partner has a medium/high risk portfolio

Which means it will grow well in the good times and drop rather alarmingly in the bad times. Presume this was explained to her in the past.

The trick is to think of how much it will have grown in recent years compared to recent losses. 
Looking at a typical medium/high risk multi asset fund, she should have seen growth of around 60% over 5 years and that takes into account the recent drops.
A 12% pa return is pretty good !

dunstonh

I know things are volatile at the moment but this still seems extreme. I asked ChatGPT if this loss could be explained by the current market and it said a 12% to 13% loss was more than should be expected. It suggested requesting a breakdown of the portfolio from SJP and getting advice from an independent financial advisor. 

ChatGPT is wrong.  Or rather what you asked Chat GPT was wrong and it lacks the ability to know what you really meant.  It did get the bit about asking an independent financial adviser rather than SJP right though.

You asked if it could be explained by the current market but you didn't state which market.   Markets are all down by different amounts.    Plus, markets all close at different times and chatGPT won't know which times apply to your value.  It may not even know what part of the world you are in.   Asia is down a lot more than the UK, for example (although UK is up less over the medium term compared to Asia - so short term variations are irrelevant)

12-13% is exactly where you would expect it for medium/high risk portfolio.

The current drops are just about classed as a stockmarket crash.      How did your partner feel in the following years:
2020 - Bigger crash than now 
2018 - similar crash as now
2015/16 - similar crash as now
2008 - double the crash than now
2000,2001-2002 - double the crash than now

As your partner has gone through similar or bigger crashes than now (and you can see they happen relatively often - losses of 20%+ occur on average every 4 years), why are they worrying now compared to with the previous ones?

kempiejon

concernedfriend137 said:

I was hoping for a little guidance on the following situation. 

a medium/high risk portfolio....

... The pot has been dropping in value and, as of yesterday, is down to £450k. 

That loss has caused my partner to have sleepless nights..

I know things are volatile at the moment but this still seems extreme.....

On the understanding that the fund, med/high risk is probably invested mostly into global equities they are down around 15% - like the portfolio. That looks expected.
If your partner has sleepless nights when their investments fall in value then investing in the stockmarket might not be for them. You've heard "The value of stocks, shares and any dividend income may fall as well as rise and is not guaranteed, so you may get back less than you invested."

Things are volatile but this is not extreme. Portfolios dropped by 40% in 2020 and 30% in 2009. I am seeing bargains today. Is your partner still buying at these low prices? 
I DIY so wouldn't devolved responsibility to SJP, it's my money, I take my own responsibility. My portfolio has fallen but I understand this is normal.

Stubod

..as above, if this is a "worry" to your friend then they should not be investing in the stockmarket in the first place, (particularly "high risk", and what do they understand by high risk??). 3

When it goes back up again, (as it will at some point), tell them to take all their money out and put it in a range of savings accounts, they only need to worry about "inflation risk" then.

Hoenir

concernedfriend137 said:

My partner has a medium/high risk portfolio with SJP. At the beginning of February this year it was approximately £535k. Her fund manager advised withdrawing some £20k from the pension as it could be tax free. 

Why did they ignore the advice? 

eskbanker

Hoenir said:

concernedfriend137 said:

My partner has a medium/high risk portfolio with SJP. At the beginning of February this year it was approximately £535k. Her fund manager advised withdrawing some £20k from the pension as it could be tax free. 

Why did they ignore the advice? 

OP doesn't say either way whether the advice was accepted or rejected, but the reference to 'loss' being 12-13% suggests that the withdrawal did go ahead.

Brie

If 13% drop is considered reasonable or an average or whatever that means that some shares/investments will have done better and some worse.  As it happens I have shares in just 1 company (ex employer) and those have dropped by 30%.  So I'll hang on to them til they recover.  But frankly even where they are now is double what I paid for them so I've not lost anything.  And I'd only lose something when I sell them.  Which I'm not doing.  

And I agree with others that if your partner is panicking because of the loss then med/high risk is not the thing to hold.

Aylesbury_Duck

Going back to the start, why did she pick a medium/high risk approach?  Presumably because she was attracted by the medium to high rewards that are possible with such an approach?  And presumably she's been very happy with those rewards in recent years?

If she's uncomfortable with the other side of that approach, it was the wrong choice.  There's definitely no benefit to panicking now, all she'll do is crystallise what is currently a paper loss.