Brexit - go all cash in pension?

[walm]

Adam B said:

Its doing wonders for my GBP denominated 100% equity pension - where 70% is US, Asia or EM equities

Now wondering whether I cash in on low GBP and switch everything to UK and European equities for a year or two (yes I appreciate this increases geographic risk)

I deliberately hedge with foreign equities.

The logic is that my job is highly dependent on the UK economy. If it goes OK, then I will be fine.
If not then my job is at risk and the last thing I want is for my savings to be tanking at the same time.
So: lots of US and EU exposure, although admittedly MUCH more US at the moment.
YMMV and DYOR obvs.

[Simpo Two]

walm said:

I deliberately hedge with foreign equities.

Talking of hedging, did anyone hear that guy fom a hedge fund rippng into Mark Carney on R4 Today and describing him as an amateur who knew nothing about economics? Carney certanly seems in the depressed 'I told you so' camp.

[Ozzie Osmond]

Simpo Two said:

Carney certanly seems in the depressed 'I told you so' camp.

Carney is screwed. With interest rates already on the floor the only tool in his locker is the printing press - and printing more money is only going to inflate asset prices even further while doing little to give help where the government needs it. UK is trying to go both ways at once with protectionism and global competitiveness. It simply cannot be done.

[anonymous-user]

sidicks said:

Hasn't the FTSE 100 gone up almost 9% over the same period?

Probably but I don't care about that, as I focus on the yield with a very long term view. Yes it can go down or cease the odd year but I seek to mitigate by looking at long term history of dividend growth. I think the only blanket dividend cuts in recent times was 2008 crash and you get the odd cutter e.g. tesco but that's why it's good to diversify in a number of sectors.

The point I am trying to make is this week in hindsight may not have been a bad time to invest for dividend income.

[mcbook]

RaymondVanDerDon said:

Probably but I don't care about that, as I focus on the yield with a very long term view. Yes it can go down or cease the odd year but I seek to mitigate by looking at long term history of dividend growth. I think the only blanket dividend cuts in recent times was 2008 crash and you get the odd cutter e.g. tesco but that's why it's good to diversify in a number of sectors.

The point I am trying to make is this week in hindsight may not have been a bad time to invest for dividend income.

I agree and most of my recent investments have been for dividends rather than capital growth. My previous post was just highlighting the fact that investing in shares for dividend returns is very different to a bank account.

[GT03ROB]

It's been a highly erratic week which kind of shows it's very difficult to pick what to do. I've built up holdings through unit trusts invested on a regular basis rather than individual stocks.

Looking at the last week the best performer has risen 20%, the worst has fallen 11%, overall up 4.5%. Heck of a difference between best & worst in just 7 days!!

[Ozzie Osmond]

The only certainty is that this has been one of the best weeks on record for the FTSE 100. Simply astounding under all the circumstances. Anyone who was nervous and out of the market has missed a trick!

[Ginge R]

This past couple of weeks has been mad. I imagine there are people who'll be worried about the situation and people who'll be happy with their strategy and will ignore the situation. Hargreaves has seen trading activity increase by 577%. I imagine they'll be happy. Visions of apoplectic savers frantically selling or parking in cash, and then trying to buy back in? Mad, mad, mad.

If you complain your FTSE funds are performing badly, think again. A fund is only performing badly when it's behind its peers. If it's doing well in its asset class (which is down on its luck) then it's not necessarily a bad fund. The question is, is the asset allocation right for you, and (then) are the funds which seek to exploit that, doing well?

One final point, if a fund loses 10% and if it then makes 10%, it's still down. Add to that, the cost of time lost.

[Adam B]

FTSE 100 up to pre-Brexit levels

FWIW I have 100% switched out of equity and into a UK based inflation-linked annuity fund, won't do anything spectacular (maybe 3-4% pa) but I am happy to sit things out for a bit, equity markets seem toppy and where are in 4th qtr of as boom cycle.

(I am 45 so have plenty of time before retirement)

[sidicks]

Adam B said:

FTSE 100 up to pre-Brexit levels

FWIW I have 100% switched out of equity and into a UK based inflation-linked annuity fund, won't do anything spectacular (maybe 3-4% pa) but I am happy to sit things out for a bit, equity markets seem toppy and where are in 4th qtr of as boom cycle.

(I am 45 so have plenty of time before retirement)

Where do you get 3-4% p.a. from ?

[bmwmike]

sidicks said:

Adam B said:

FTSE 100 up to pre-Brexit levels

FWIW I have 100% switched out of equity and into a UK based inflation-linked annuity fund, won't do anything spectacular (maybe 3-4% pa) but I am happy to sit things out for a bit, equity markets seem toppy and where are in 4th qtr of as boom cycle.

(I am 45 so have plenty of time before retirement)

Where do you get 3-4% p.a. from ?

+1 which fund pls ?

[Adam B]

That was historic 3 and 5 year average, no guarantee of future performance etc etc but this fund is not in equities.

It's a little opaque as its via my companies pension site run by AXA so it's a bit white label.

Will try to find out but it was "UK inflation linked annuity target fund" or similar

[sidicks]

Adam B said:

That was historic 3 and 5 year average, no guarantee of future performance etc etc but this fund is not in equities.

It's a little opaque as its via my companies pension site run by AXA so it's a bit white label.

Will try to find out but it was "UK inflation linked annuity target fund" or similar

I'm afraid that average has been achieved on the basis of falling interest rates - you've now bought in at a level where rates have dropped significantly (and prices already reflect a very high likelihood of two further rate cuts this year) and where real yields are something like minus 1.5%, so I think that you'll be struggling to achieve much of a return in the next year or two.

[Adam B]

Rates have been crap for a while and the 1 year return was respectable, yes I know they have worsened this year. As I said not looking for a return 1-2% would do with near zero inflation), this is a temporary port in a storm, however I also accept my storm predictions may be wrong too

[sidicks]

Adam B said:

Rates have been crap for a while and the 1 year return was respectable, yes I know they have worsened this year. As I said not looking for a return 1-2% would do with near zero inflation), this is a temporary port in a storm, however I also accept my storm predictions may be wrong too

It was 3-4% a few posts ago.

It would appear that you do not fully understand how inflation-linked bonds work and hence what your return is linked to?

[Adam B]

thanks for your patronising reply amusing if you knew what I do/where I work

anyway my uncertainty was to down to poor memory rather than poor knowledge

here is cumulative recent performance



digging deeper 60% is currently in long-dated gilts, with coupons averaging 1.5% so I fully expect future performance to be lower

But as I said this is not about return, it is a tactical move, and I have other equity investments

[sidicks]

Adam B said:

thanks for your patronising reply amusing if you knew what I do/where I work

It wasn't meant to be patronising, but you were firstly claiming an expected 3-4% return for the fund, then suddenly it was down to 1-2% assuming zero inflation.

No idea where you work, those expectations are entirely at odds with the investment class you've chosen to invest in and the market conditions expected over the next 12 months, unless you factor in massive manager alpha (which then contradicts the low risk nature of the strategy).

Adam B said:

here is cumulative recent performance

Past performance is generally no guide to the future and even more so in the current environment!

Adam B said:

digging deeper 60% is currently in long-dated gilts, with coupons averaging 1.5% so I fully expect future performance to be lower

So an index-linked bond fund with assets predominantly NOT in index-linked bonds?!

60% in long-dated gilts should get you the 2% you are looking for, depending on the how the economic environment evolves during that period.

Adam B said:

But as I said this is not about return, it is a tactical move, and I have other equity investments

That's fine - if you understand what you are likely to get then no problem.

Edited by sidicks on Tuesday 5th July 14:54

[Adam B]

sidicks said:

you were firstly claiming an expected 3-4% return for the fund, then suddenly it was down to 1-2% assuming zero inflation.

yes I was wrong, apologies was trying to recall the stats from a previous week whilst not at my PC

sidicks said:

Past performance is generally no guide to the future and even more so in the current environment!

adam b said:

so I fully expect future performance to be lower

sidicks said:

So an index-linked bond fund

please stop mentioning bonds as I never did, its a "UK inflation linked annuity target fund" so its target (and benchmark) is to achieve returns similar to an annuity + inflation.

sidicks said:

That's fine - if you understand what you are likely to get then no problem

thank you, not sure I will bother giving a view next time, the exact fund wasn't the point - the point was I had done exactly what the OP was considering for similar reasons

Edited by Adam B on Tuesday 5th July 18:47

[walm]

Adam - I think you just got people excited with the idea of a low risk 3-4% return product.
That would be of interest to a lot of us!!!

The reason he keeps mentioning bonds is because you said it wasn't in equities and to hit an annuity-like (or PLUS!) return means bonds will be the predominant underlying asset (most likely).

Your opinion definitely ties with mine so don't give up on us!

[Jockman]

Nice one Adam. Sidicks has an unusual posting style but you get used to it if you persevere