My Pension Funds - honest opinions please!

smithy11

Hi,

I've recently taken out a company stakeholder pension.
Its a Friends provident pension annd my fund selection and allocation is as follows:

BGI Balanced Index (10%)
BGI European Equity Index (15%)
BGI UK Equity Index (5%)
Friends Overseas (15%)
Friends Pacific Basin (30%)
BGI Global Equity 60:40 Index (25%)

I am 30 years old and would consider my risk profile medium - medium High.
I would be very interested to hear peoples thoughts on this.

Thanks

bigbloke45

Did you use any particular thought process for this asset allocation, or did you just "have a guess"?

Either way, you could be onto a winner or a loser; the trick is to monitor and change as appropriate.

Just a thought, there aren't many professional fund managers that can "call" the market.

So, good luck to you, keep on investing for your future!.

Have you looked at the asset allocation of FP's penson funds? Might be worthwhile to compare with your own selection?

smithy11

I looked at past performance, etc, and these five have performed particularly well when compared to the rest.
I know past perf isn't an indication of how well they will do in the future, but, as you said, i will continue to monitor them and change if need be.
I've found Trustnet to be particularly useful and set up my portfolio on there.
I was really just wondering whether anyone had any particular thoughts on any of the FP funds?

Thanks

Debt_Free_Chick

All of the "index" funds will follow the market. So, for example, the UK Equity Index fund will track what happens in the UK stock market. If the market falls 10% - then so will the fund.

There's nothing inherently wrong with that - as when the market rises so will the fund - but you need to be prepared for those funds to fall in some years and rise in others.

Also, by choosing an index fund, you are not expecting the manager the "beat" the market. Indeed, the "manager" is pretty much a computer system that replicates what the market is doing. So ...... don't expect the funds to perform much better - or worse - than the market it's tracking.

ossian

To expand on these themes:

Debt_Free_Chick wrote: »

All of the "index" funds will follow the market. So, for example, the UK Equity Index fund will track what happens in the UK stock market. If the market falls 10% - then so will the fund.

Normally Index Trackers are cheap and perform almost as well as the market (tracking error and charges mean they aren't quite as good). Warren Buffett recommends them for the Man on the Clapham Omnibus.

Debt_Free_Chick wrote: »

There's nothing inherently wrong with that - as when the market rises so will the fund - but you need to be prepared for those funds to fall in some years and rise in others.

QFT!

Debt_Free_Chick wrote: »

Also, by choosing an index fund, you are not expecting the manager the "beat" the market. Indeed, the "manager" is pretty much a computer system that replicates what the market is doing. So ...... don't expect the funds to perform much better - or worse - than the market it's tracking.

The most common alternative is managed funds however the majority of these are outperformed by the index trackers when charges are taken into account (this is why Warren recommends them).

Personally I think a combination of UK index (FTSE250 ideally) and a global tracker give a nice healthy exposure to global growth with a UK bias. You've kind of got this here.

Try reading this article, it's about EFTs which are a different kind of tracker but assuming (I don't know) your funds have low charges or there is some other good reason (like employer contributions) for buying from this selection of funds you can take the principles from this article and apply them to your investment choice.

Next walk away and ignore the ups and downs along the road. In the very long term it will look like a reasonably even road to wealth.

Take care,
Ossian