SIPP's and tracker funds

[Halitosis]

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?

[Montello]

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…

[Halitosis]

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!

[mk2driver]

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_

[Montello]

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.

[M1011]

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?

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!

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)

Appreciate the heads up, but already paying into a DB scheme at work so this is just in addition to that.

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.

[Halitosis]

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)

Yes clearly the fund provider has changed its own benchmark a couple of times over the years so its difficult to directly compare. The new benchmark appears to be a pro-rated average of three global indexes so performance from this year should be closer to the benchmark (i.e. the benchmark being more appropriate, not that your fund will suddenly perform better!).

To be fair, I think your fund of funds is just what I would take if it were available to me: it includes emerging markets such as India etc., which overcomes the lack of exposure a straightforward MSCI World tracker carries as explained so clearly by Montello. The US has had an incredible period of growth, but the better question is where the next growth will occur.

[Montello]

... but the better question is where the next growth will occur.

Ah ... if you know please advise as that is the big question ... usually not the sector that has just enjoyed a big melt up ...

The bottom line is no one knows so the best you can do is diversify ... as they say its the only free lunch in investing.

I can't help but think the industry deliberately tries to make this stuff as opaque as possible leading to people losing interesting allowing the industry to underperform for clients and bump up their own fees. All that mucking about with the benchmark above, how is that helping anyone make a comparison?

Note the bonds sector has impacted a lot of pensions recently with automatic "life styling" making matters worse not better ...

https://www.telegraph.co.uk/money/pe...nsion-savings/

https://www.express.co.uk/finance/pe...-crash-savings

[trident-7]

Yes clearly the fund provider has changed its own benchmark a couple of times over the years so its difficult to directly compare. The new benchmark appears to be a pro-rated average of three global indexes so performance from this year should be closer to the benchmark (i.e. the benchmark being more appropriate, not that your fund will suddenly perform better!).

To be fair, I think your fund of funds is just what I would take if it were available to me: it includes emerging markets such as India etc., which overcomes the lack of exposure a straightforward MSCI World tracker carries as explained so clearly by Montello. The US has had an incredible period of growth, but the better question is where the next growth will occur.

I'm probably overexposed to India a bit...but sometimes you have to go with your gut.....surely it can't be as arse clenching as Bitcoin.

[LukeBird]

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.

Yeah I think you’re right.
It doesn’t work for me unfortunately, but at least I can get some ‘free money’ from the LISA government contributions.
I’m still fairly young, so always worthwhile looking into these things early!