Friends Provident Pension: funds switch

Annie2008

I'd appreciate some input to an investment novice about my pension plan with Friends Provident.

Currently I'm investing 25% into each of these funds of my monthly payment of £75.
Managed - 271 Accumulation units
Stewardship - 882 "
UK Equity 318 "
European 96 "

The Stewardship is performing the worse (see http://customer.friendsprovident.co.uk/fund_centre/pension_funds/performance/index.jhtml) at -16.1.
The others -1% or less.

Do you think I should move my monthly payments into the cash fund for example as an interim measure? (I'm allowed 2 switches/year free)
Should I move the accumulated units as well or could it be better to wait for an upturn!!

Thank you for any opinion you maybe able to offer on this.

dunstonh

Do you think I should move my monthly payments into the cash fund for example as an interim measure?

Why?

Should I move the accumulated units as well or could it be better to wait for an upturn!!

How old are you?

EdInvestor

I wouldn't do anything - this is just a blip in a long term savings plan like a pension.The Stewardship fund is very similar to an equity income fund, and all these are doing poorly at present because they tend to feature quite a few financial shares which have been hard hit by the credit crunch.

However they will recover in due course and meanwhile they are paying solid dividends.Over the long term, dividends make up one third of stockmarket returns.

Annie2008

I was thinking of moving into the cash fund or a fund that appears to be performing better to try and safeguard the small amount that I have. I don't have much propect of saving enough for my retirement so it's worrying!

I'm 52

dunstonh

Ok, now we have a bit more information, we can give a bit more info. You are 52. unless you are retiring in the next 5 years then I wouldnt be concerned. You are currently buying units cheaper than 12 months ago. Drops like this are good news on long term regular paying contracts.

Annie2008

Thanks for explaining Dunsonh. No way can I afford to retire!

Really appreciate any comments about redirecting my monthly payments of 25% each into
Managed
Stewardship
UK Equity
European


My risk profile is medium to cautious, I want growth but secure investment.

dunstonh

You are investing above your risk profile at the moment if you say low/medium. Just to put that low/medium into context, how much of a drop in percentage terms would be acceptable to you in a given 12 months? When would you start to worry? (10%, 15%, 20%, 50% etc)

It may be worth utilising more than just 4 funds. For the existing investments, it may be time to start factoring in some of the fixed interest/bond funds and increase the exposure to those each year as you get closer.

EdInvestor

A cautious investor should have no more than 60% in shares - the other 40% in bonds and cash type funds.

You have approximately 90% in shares.