Mixed Portfolio Pension Plan

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
1 reply 697 views
farhad1965farhad1965 Forumite
112 Posts
Last year I seeked Pension advice because I were unhappy with my pension plan's performance.

I had an IFA review my pension plans (which were managed funds), and he explained that most managed funds contain 80% equities and that there are much better performing options available in the Pensions market place.

The funds was transfered into a portfolio that included Commercial Property, Gilts, Bonds and top performing unit trusts and looked something like this:

20% Commercial Property
10% Gilts
10% High Income Bonds
30% UK Equity Income unit trusts
10% UK Equity Unit trusts
10% European Equity Unit trust
10% International Equity Unit trust.

In the past 12 months my pension fund has grown from £75,579.01 to £88,013.91. In effect a rise of + 16.45%. This is the growth of the fund value and not due to any additional premiums I have paid in. I have paid in £600/month over this period (I am 40 and plan to retire in 2025 aged 60)

In the same time the average managed fund has risen 10.9% and the FTSE by 11.59% (source Moneyfacts June 05).

Just shows what a diversified approach can achieve. Anyone else using this method yet? What results are you achieving?

Farhad

Replies

  • dunstonhdunstonh Forumite
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    Every portfolio I arrange is like that. 5-10 funds covering the sectors in percentages that average out to the risk profile of the individual.

    The days of picking one fund should be long gone now. Any financial advisor (tied or independent) who recommends a one fund solution should not be getting your business (a few exceptions may exist to very low risk clients where options can be limited or where the fund values are quite low).

    Over the last few years there has been a push to have asset allocation. Some providers have issued funds which are managed to control that asset allocation. They are multi manager and multi sector but I am not a fan of those. I prefer a "manual" split very much like you have put above. However, that option is better than the bog standard "managed" fund which many people will find themselves in.

    11%-26% is about range of growth my clients are seeing in the last 12 months (based on annual fund reports that are being written at the moment. Mostly at the 16% end. The higher end returns have been on the higher risk clients. On the whole, its been a good 12 months for most high risk sectors. The 11% end have been the low risk clients who have still done very well for low risk investments. Mostly bolstered by commercial property funds.

    Good topic for you to post as its less important to pick the "best" fund. At the end of the day, we never know what that is going to be. It is far more important to pick a range of sectors and then pick the funds from there.

    The UK will be best sector on average once every 5-7 years. Stick it all in a UK tracker fund and you will on average perform less than a portfolio spread over the sectors. That is historically anyway. It is quite possible that the UK could be best once every 3 years or never be best sector again. At the end of the day, asset allocation means you are not putting all your eggs in one basket.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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