Not wanting to derail Ryan's BTL thread, the chat about trackers and interest rates caught my attention.
What funds are returning 6% plus at the moment? Not really over the moon with my current workplace pension performance.
A couple of colleagues suggested St James's place, but the fees look horrendous, especially the entrance fee when so close to retirement.
Most American funds have performed well recently. Don’t quote me, but I believe that the S&P500 has returned 10%+ on average for decades and decades, so well ahead of the 6% you’ve mentioned.
I’m no expert but I do choose my own pensions funds (would prefer ETFs but not an option the providers I’m with).
The 4 funds I hold via my main pension provider Aegon are:
TEC-Aegon/Scottish Equity Texhnology
AFA-Scottish Equitable Axa Framlington American Growth
XHS-Aegon HSBC Life Islamic Global Equity Index
IEI-Scottish Equitable Invesco Global Equity Income
In my NEST pension I go with the below fund based on its risk exposure and performance versus the only other options I could see:
NEST Sharia Fund
I’’ve got a new Pension (new job) with Royal London and went with the below as initial choices to get me away from the defaults…
RLP/Blackrock ACS US Equity Index
RLP/HSBC Islamic Global Equity Index
I’d strongly recommend watching some YouTube video by Damien Talks Money if you fancy upskilling, not only on pensions but on all things financial. He does have some pension google sheets that list some recommended funds by all the most popular pension providers and believe the below video gives details. (I’m in no way affiliated!)
https://youtu.be/lP30qVRLyTY?si=oFg6YgyQYrAu-LU3
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Last edited by Ikincooper; 24th March 2024 at 21:51.
Good advice above. Whatever you do, don’t go near St. James’s Place. You don’t need to be an investment guru or speculator, just learn the basics of how it all works and start off slowly to get the hang of it.
Im with SJP and over the last 3 months my investments have gone up over 12% , i have a 40% assets in North America.
Last edited by Franky Four Fingers; 24th March 2024 at 22:14.
My investments in an S&P tracker fund have increased by 11.7% in the last three months. SJP are quite widely used but in my experience they are very expensive compared to other IFAs. I would certainly be wanting a return greater than a tracker fund.
SJP should be ashamed of themselves. They ought to be the next PPI scandal, with the fees they’ve ripped their “customers” off with over the years. Unbelievable that they’ve got away with it for so long.
My parent’s neighbour was singing their praises a few years ago and I told my Dad about their ridiculous fees. Dad must have told him ad he asked me to explain in more detail, so I ran him a computation of what his pension would be worth with similar investments over the last 30 years with Vanguard instead of SJP. He was stunned to hear that there was over £100,000 difference. Just due to the crazy high SJP fees and how compound interest affects investments over long timeframes.
He was gobsmacked.
Avoid SJP and similar scam companies at all costs!!
S&P500 has done 14% per year over the last 5 years.
Although the vast majority of that has been from the super 7.
Over the last 100 years, nothing has really outperformed the SPX. (Except Bitcoin).
https://www.nasdaq.com/articles/wait...y-you-probably
Unless you want some kind of active management, then a combination of Vanguard trackers will do the trick. You can pick what % of each you’d like - US; emerging markets, high yield etc, or, just pick one of their funds that has a simple % of it in equities. They do splits like 80/20 where 80% is in equities.
To go this route, simply see if their funds are available via your work pension or your SIPP provider and if it’s a SIPP then pick a platform with flat fees.
I keep on reading this but unless im missing something I don’t see where theyre ripping me off?Originally Posted by mr noble
When i went with them a few years ago i posted on here and similar was said, I looked in to all the major players and they were all roughly the same give or take a few 0.01%. As of 24-25 they are also changing their charging structure to make it clearer in what they actually charge.
Unless they are deliberately hiding some hidden charges i dont know about?
For me it was a no-brainer, i had 6 pensions spread over 5 pension companies and if i turned up my clogs my missus would have had a right ballache sorting it out. Now its all in one place, i can see whats going on, i have 2 meetings a year and i can change at them drop of a hat with no exit charges.
Last edited by Franky Four Fingers; 25th March 2024 at 08:45.
If you have done your research and you are happy with them, that’s fine. You have probably
already paid their high upfront fees anyway. They apparently reduced their prices recently after scrutiny from the regulator.
If you google ‘SJP investigation’ you’ll get some sense of why I and others avoided them.
SJP are an FA and not an IFA - an important distinction omitting the “independent”.
Also a rising tide lifts all boats so even poorly managed funds with extortionate fees will have done well in recent times.
Self invested global tracker set and forget in my opinion.
How high are SJP fees? My IFA annual management charges are 0.8% and shopping around I can’t find lower
Are the majority suggesting going with no IFA and putting it all in SIpP’s?
On the fees front, I honestly have no idea however yes I believe that many (myself included) are suggesting no IFA and then picking your own funds/trackers/ETFs via a SIPP.
It’s very rare for a managed fund to beat the index it’s trying to beat, hence the advise to use trackers/ETFs as not only will these likely perform best but they tend to also have the lowest fees which over years and years does make a huge difference due to compounding.
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Vanguard SIPP annual fee 0.15% and that’s capped at a maximum of £375.
I hold just a single Vanguard index tracker fund that has a 0.23% fee.
Clear and concise, pretty cheap too.
I would avoid SJP, they have (had) a license to print money.
If you want to know more about how to pick your investments, you could do a lot worse than this book;
https://www.amazon.co.uk/Investing-D.../dp/0273781340
Ex IFA here
Something to remember before investing money:
Costs are certain, investment performance isn't.
Pay VERY close attention to fund, management and advice charges.
I have 60% of my Sipp in a HSBC FTSE World Index Tracker via HL. 0.13% management charges on top of the HL platform fee, it's done really well for me.
I moved my private pensions over to Sipps when they came out and went with no trackers and and a fairly exciting portfolio.
I retired at 50 so they did OK for me.
Learn a bit about investments. Don't put all your eggs in one basket and be adventurous if you have the time.
Cheers,
Neil.
Great advice
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I’ve used Monevatpr for most of my research. It’s a very good site which explains everything and also shows some example portfolios and funds
https://monevator.com/category/inves...ing-investing/
I’ve used this for my SSISA and SIPP
We set up ones for our children with world index tracker when they turned 18.
Some interesting comments here, the key is not to be lazy and do a bit of research. There is loads of info on YT and elsewhere.
Below is not advice just sharing my own observations. I'm not and IFA or financial professional. There maybe errors in my understanding.
I'd defiantly focus on keeping costs to a minimum, I see no value in expensive advice or platforms, there is so much research showing that few actually beat the market.
When comparing indexes make sure you know what you are buying. You can not just compare indexes without taking into account the impact of the dividends and the compounding effect they can have. For example the FTSE100 pays a better dividend than the S&P500.
When looking at a global tracker make sure you understand what global means.
The below shows the composition of the MSCI index family.
Many global trackers track the MSCI World Index; but note that does not include any emerging markets including China and India, doesn't seem very global when you look at it like that.
The MSCI World Index is dominated by the USA and the USA is dominated by the magnificent 7 (The “Magnificent 7” refers to the group of the U.S. tech giants, including Amazon, Meta, Microsoft, Nvidia, Google, Apple and Tesla). All have seen their market caps increase recently as Big Tech continues to dominate the U.S. stock market's landscape.)
When you look at it like that the global tracker doesn't seem as diversified as you may think ... (20% of your global tracker is in just 7 companies)
The below shows the world markets, you may wish to think about that when selecting which indexes you may wish to track. Note some big ones not in MSCI World Index.
Also note that the size of the market doesn't match the size of the national economy. America is *only* 28% of the global economy but the USA markets are a much bigger share.
Also note that when selecting its probably best to compare the accumulation version of the trackers to get the dividend effects rolled in.
Here are some examples below which map onto the MSCI graphic above. Note that different funds do better at different times, also note the global fund seems to track the S&P500 as that is its major constituent.
Also note that geographic diversification isn't as obvious as you may think For example 80% of the revenue of the FTSE100 is global so just because they are listed in the UK doesn't mean it is a domestic investment. Compare that with the S&P500 and 60% of their revenue is domestic. So in a way the FTSE100 is more of a global investment than the S&P500.
The FTSE100 is oil, drugs, banks, miners and consumer goods (all out of fashion) where as the S&P500 is tech dominated (34% !!)
Sometimes the the world needs more real stuff rather than another website ... so diversification isn't just about global spread but investing in a range of sectors.
Note these figures were done about 2 weeks ago using data from hl.co.uk
The above shows how different indexes have performed at different times recently. Point is they are different and so blended together give a good coverage. Just putting all your money in a global tracker maybe doesn't give you what you think it might ...
Note all the funds in the above list have fees ranging from 0.06% to 0.23% so they are all low cost funds.
As I say it's worth doing your homework to know exactly where your money is invested and if you think that mix is right for you. An MSCI World Index fund seems very focused on US/tech ... yes that has had a great run but who knows if that will continue???
Last edited by Montello; 26th March 2024 at 22:33.
Vanguards S&P500 has provided a good return last 18months. I moved from U.K. funds that had a bond element when Ms Truss did her mini budget and moved to U.K. equities.
I don’t manage it much except adjustments with big ticket events.
For the Vanguard users there is an App called Sentinel that is useful to see at a glance returns:
I’d run quickly in the opposite direction from SJP.
https://www.ft.com/content/e8f1b2ed-b1d7-4311-a8c9-fb784c1b344e
Thanks for that recommendation, useful, bit basic and limited to 6 funds which is just enough for my needs.
I believe Vanguard will be rolling out an app this year ... bit strange they don't have one in the UK, they do in the USA.
Vanguard’s website is pretty good but i have been waiting on an app so glad to hear it’s finally on the way.
https://www.ftadviser.com/investment...-uk-investors/
in the USA
https://investor.vanguard.com/client...ts/mobile-apps
Perhaps others might find the below video useful/insightful. Many of the points have been raised already…
https://youtu.be/uCydOfGCDDQ?si=fH-yp3C4VZLuAHy9
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That is a large gap in performance though I’d be surprised if it is actively managed at that fee rate. Does the fund fact sheet state the aim of the fund M1011? Perhaps it’s only to “loosely” track but with some freedom?
With that bigger gap to the benchmark it can’t be trying to track the benchmark as tracking error is usually small. Not 6% different…
I see the sector allocation blurb talks of underlying funds, so M1011's investment is in a "fund of funds" - perhaps that precludes accurate tracking of any one particular index - it uses "Global Equity Benchmark" but references a note on page 4 so presumably that's the nearest/most appropriate index benchmark applicable. Although the gains lag the benchmark in good years, at least the losses in 2022 were less!
Most global equity funds are USA heavy but that’s because they mimic the stock market as a whole
This video does a great job at explaining it
https://youtu.be/98uYT3km5vk?si=dz5FzNjWUiLcfph_
Aye, because 47% of global markets are the USA as shown in the above graphic, I think the more important thing to know is what markets are excluded from some “global” funds. E.g India and China.
Below seems to be relevant info, but to be honest I'm not sure. Given the option I think I'd want to track as close as possible, but this seems the best of the pre-canned workplace pension options available to me.
Investment Objective
The Fund aims to provide long term growth.
The Fund mainly invests in company shares, also known as equities, from around the world. Investing mostly in equities means that
the Fund's value can change a lot in a short period of time. For this reason, it may not be a suitable choice if you'd like a more
stable fund or if you're close to retiring
Benchmark performance shown in our tables and charts is for comparison purposes only and is based on Total Returns, which
assumes the reinvestment of any income. The benchmark will not include any costs and charges that apply to the Fund, which could be
a reason why the performance of the Fund may not exactly match the performance of the benchmark.
Benchmark constituents:
- From 01/11/2023: 44% MSCI World Index, 44% MSCI World Index GBP Hedged, 12% MSCI Emerging Markets
- From 16/03/2018 to 31/10/2023: MSCI All Country World Index
- Prior to 16/03/2018: 30% FTSE All-Share Index & 70% FTSE AW - All World (ex UK) Index (75% hedged)
I believe you can have both DB and DC if you wish, could set up a SIPP. If hypothetically you're a higher rate tax payer, , putting 5k annually in a LISA costs you 4k, whereas putting 5k annually in a DC pension would cost you 3k. Worth a thought although may not be right for you of course.
I have 60% of my SIPP in this fund, has done well for me and it's just a case of leaving it alone to do its thing.
That fund is 58% in the USA. Top holdings the magnificent 7 so has benefitted from the tech boom in the last year.I have 60% of my SIPP in this fund, has done well for me and it's just a case of leaving it alone to do its thing.
This is the fund my recently started pension with Aviva is allocated to. It's the default fund and is relatively low risk. Thoughts and observations from those in the know much appreciated.
Last edited by beechcustom; 27th March 2024 at 11:39. Reason: Trying to upload readable files
Low cost provider, cheap global equity tracker.
Vanguard & FTSE Global All Cap Index Fund is a combination that works for me.
Certainly no expert, and all that matters is that you're happy with it matching your risk appetite and situation. It appears to be 60% in bonds and gilts, which are usually less risky/volatile, so if you're a "safe and steady wins the race" type, or perhaps not too far off wanting to start withdrawing the pension funds, then it should serve you well. Might be worth checking to see if the pension has "lifestyling" - which automatically moves a client's funds into bonds/gilts and cash over the final 10 years before retirement. This is a good option for someone who intends to buy an annuity on retirement, but perhaps not if they intend to leave it invested into older age and/or drawdown in bite-size pieces (think this may have been mentioned by someone earlier in the thread).
Usually pension providers enable one to change the funds they're invested in at no cost (often a few clicks on their app or website) so if you decide at any point you'd rather switch some or all of your funds or contributions, then that should be easy to do too.
Thanks for the reply Sir, much appreciated.
Staggered that all the talk in this thread is about fees and returns only. Quite how you can select any kind of fund, asset class or equity sectors without first ascertaining your risk appetite is beyond me. Get your risk score and start there otherwise you’ll end up bemoaning that you have unsuitable funds further down the line.
Last edited by RustyBin5; 19th April 2024 at 17:00.
Managed so far w/o a risk score. Same goes for credit score TBH - made up metrics to create business for advisors and such like.
I quite like an adventurous investment and have other pensions so this SIPP will be on the higher risk/reward end, also only looking to invest for 10/15 years so its not got a huge amount of time to grow hence the higher risk factor.
Serious question...what's a risk score?
Was someone sold a risk score
I’ve never had a risk assessment/score performed but have a very good idea of my personal risk appetite. TBH if a risk assessment came up with a result that varied from my own perceived appetite then I would likely assume them to be wrong.
Last edited by Halitosis; 20th April 2024 at 06:09.
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