How many funds should I invest in a SIPP?

Tractorboy72

Currently switching my wife's and my pension from Nest to a SIPP with Interactive Investor. How many funds would be the right amount to split it between? We have around 800k in total.

SVaz

Depending on your ages, 1 or 2 could be enough, Global equities fund/s if you have over a decade to retirement

Close to retirement then a mixture of Equities, Bonds and Short term money market funds to spread the risk.

Bostonerimus1

I use 4 funds; domestic equity index, global (ex domestic) equity index, an income fund that I use as my bond allocation and a MMF for cash.

dunstonh

https://forums.moneysavingexpert.com/discussion/6656585/how-many-funds-should-i-invest-in-a-sipp

It depends on your chosen investment strategy and, if you are drawing from the pension, making sure it matches your drawdown strategy.

I use 12 funds (single-sector funds cost less than global equities. Plus, I like a tilt away from market cap (ie, less US equities) - so building the spread using those is usually more cost-effective -, and I prefer a more nuanced mix of defensive assets than a catch-all fund).

You haven't said what your chosen investment strategy is. So, a lot of it will be down to that.

Tractorboy72

https://forums.moneysavingexpert.com/discussion/comment/81896195#Comment_81896195

We are not looking to take anything from the pension pots for at least 2 years maybe more. I am more open to risk than my wife. My nest pension has done very well over the last few years. It is invested in Sharia fund which is heavily focussed on US Tech companies. Thinking we would rather spread the money over a few funds would be a good idea to make the risk less.

DRS1

There are plenty of threads on here (and the Savings and Investment Board) about people wanting to water down their exposure to the US and/or tech or people who want to take their money off the table completely. If you have a read around those threads and they may give you some ideas.

Presumably you have thought about whether you want to use drawdown/UFPLS to access the pensions or whether you want an annuity. That question may make a difference to how you invest right now so worth thinking about now.

MallyGirl

https://forums.moneysavingexpert.com/discussion/comment/81896406#Comment_81896406

you can make the risk lower by choosing a single lower risk multi asset fund. You don't have to get more complicated than that. Saying that, with £800k to play with, you might benefit from getting advice from an IFA

Tractorboy72

https://forums.moneysavingexpert.com/discussion/comment/81896527#Comment_81896527

Did have a few meetings with IFA's. Did learn a bit from these meetings but the amount they all want to charge both my wife and myself did not think it was worth paying this amountm per year. Have run my own business for almost 30 years so feel confident in managing it myself.

MallyGirl

in which case it's time to do some reading. There are plenty of free resources online.

You could start by looking at the commonly mentioned multi asset funds - vanguard Lifestrategy, HSBC Global Strategy, BlackRock etc. Once you gain a bit more knowledge you might identify gaps in these base products that you would like to fill with additional fund choices eg small cap or emerging markets

NotDeniseCoates

I've got a SIPP of about the same amount. I invested in a couple of Vanguard LifeStrategy funds for my preferred bonds/global equities weighting, then topped up with Europe, emerging market, and Asia Pacific ETF's for more diversification.

Linton

https://forums.moneysavingexpert.com/discussion/comment/81896406#Comment_81896406

2 years is short term when investing. iI there was a crash it is quite likely that the markets would not have recovered by the time you needed the money. What would you do? It would not be unreasonable to already have the money you will need in say the next 5 years in lower risk investments.

Having a large % of your investments in a single sector, particularly tech, is high risk. Crashes of 60% have happened in the past in such portfolios and could happen again.

The key question to answer is what are your safety and return requirements. Then choose the minimum number of funds that should meet them. The right answer could well be one if you are accumulating for the long term. I have 6 in my long term portfolio and 9 in the income portfolio as I am retired and want detailed control over how my money is invested.