Discussion
My company pension is with Aegon, and is one where I can select my own funds. When setting it up ~3 years ago I did a bit of research and picked some funds. They did OK, but 6 months or so ago I swapped a couple of them. Having never really paid any attention to markets, It's mainly complete guesswork.
I'm ware that in the early years I should accept more risk to potentially grow the pot more quickly, and lower the risk as the pension is reaching maturity to maintain balance, but how does one go about selecting funds, and how often should I be changing them?
Any fund picks that I can switch to and sit on for a couple of years to see a decent bit of growth?
I'm ware that in the early years I should accept more risk to potentially grow the pot more quickly, and lower the risk as the pension is reaching maturity to maintain balance, but how does one go about selecting funds, and how often should I be changing them?
Any fund picks that I can switch to and sit on for a couple of years to see a decent bit of growth?
rsbmw said:
My company pension is with Aegon, and is one where I can select my own funds. When setting it up ~3 years ago I did a bit of research and picked some funds. They did OK, but 6 months or so ago I swapped a couple of them. Having never really paid any attention to markets, It's mainly complete guesswork.
I'm ware that in the early years I should accept more risk to potentially grow the pot more quickly, and lower the risk as the pension is reaching maturity to maintain balance, but how does one go about selecting funds, and how often should I be changing them?
Any fund picks that I can switch to and sit on for a couple of years to see a decent bit of growth?
You shouldn't be picking any 'growth' funds if you only have an investment horizon of two years.I'm ware that in the early years I should accept more risk to potentially grow the pot more quickly, and lower the risk as the pension is reaching maturity to maintain balance, but how does one go about selecting funds, and how often should I be changing them?
Any fund picks that I can switch to and sit on for a couple of years to see a decent bit of growth?
In principle, and for a minority admittedly, you can't really advocate that any longer. A pension used to be a user lifetime product - now, it can be a device to help inter generational estate planning. If you have a pot that you know you'll never touch, and if you're, for instance, 65 and want to leave it to your kids, you could still have a fifty year strategy in mind for it.
Like I said though, a minority.
Like I said though, a minority.
Ginge R said:
Are you in Aegon's ARC range of pension funds?
I don't believe so, shows as Group Personal Pension Scheme (Version 13), and I don't log in via the ARC link on the homepage.sidicks said:
You shouldn't be picking any 'growth' funds if you only have an investment horizon of two years.
Investment horizon is 30-35 years, however this is essentially the question I asked above, how often should I be looking to check/change funds to get the best growth potential. I don't expect picking some random funds and then not checking them for 10 years is an overly bright idea.Ok. It might be worth keeping your powder dry for a few weeks and then asking your HR or adviser how this news may impact your options. Although these refer to getting close to retirement, the chances are there'll be some measure of ripple effect elsewhere in the retirement proposition.
In principle though, it seems like you want to take on more scope for growth (ie; more investment risk)?
http://citywire.co.uk/new-model-adviser/news/aegon...
In principle though, it seems like you want to take on more scope for growth (ie; more investment risk)?
http://citywire.co.uk/new-model-adviser/news/aegon...
rsbmw said:
Investment horizon is 30-35 years, however this is essentially the question I asked above, how often should I be looking to check/change funds to get the best growth potential. I don't expect picking some random funds and then not checking them for 10 years is an overly bright idea.
I think you need to differentiate between the performance of the asset class and the performance of the manger you've chosen to manage your selected asset classes.Reviewing the latter over a shorter timescale is more feasible.
Here's what I'm in currently
First state Asia Pacific not doing brilliantly, the perpetual income fund was nice and steady for 3 years though up until the last few weeks.
Certainly open to a bit of risk, especially this early in the pension. Looking for both fund tips and general strategy on review / how to select funds that I can apply moving forwards.
First state Asia Pacific not doing brilliantly, the perpetual income fund was nice and steady for 3 years though up until the last few weeks.
Certainly open to a bit of risk, especially this early in the pension. Looking for both fund tips and general strategy on review / how to select funds that I can apply moving forwards.
IMO the two best bits of advice you can get when investing long-term via funds are:
1: Don't just do something, sit there; and
2: You get what you don't pay for.
1 means that if you're in a fund with the appropriate level of risk for your circumstances then you should simply stick with it through thick and thin. Lots of people change if their fund has a couple of bad years but you should instead see it as an opportunity to buy units while they're cheaper. If you sell units in one fund when everyone else is doing the same, and buy units in another when everyone else is doing the same, then even with single-priced funds you're chipping away at your returns each time you do this.
2 means you should actively seek out funds with lower charges. The cumulative difference over twenty, thirty years between a fund with 1% charges and one with 0.5% charges is considerable. In practice this means tracker funds - for example the total charge on the tracker fund I invest my pension in is 0.12%. Lots of people will swear that their fund manager knows better than the market because they've had a few good years, but given how many thousands of managers/funds are out there that's always going to be the case. There's plenty of evidence that over the long term (which is what we're concerned with here), managed funds don't do any better than trackers, in fact slightly worse because of their higher charges. I work in financial services for a company that has a large fund-management arm so should really be cheerleading managed funds as we make more money from them, but to be honest I think they're a waste of money.
1: Don't just do something, sit there; and
2: You get what you don't pay for.
1 means that if you're in a fund with the appropriate level of risk for your circumstances then you should simply stick with it through thick and thin. Lots of people change if their fund has a couple of bad years but you should instead see it as an opportunity to buy units while they're cheaper. If you sell units in one fund when everyone else is doing the same, and buy units in another when everyone else is doing the same, then even with single-priced funds you're chipping away at your returns each time you do this.
2 means you should actively seek out funds with lower charges. The cumulative difference over twenty, thirty years between a fund with 1% charges and one with 0.5% charges is considerable. In practice this means tracker funds - for example the total charge on the tracker fund I invest my pension in is 0.12%. Lots of people will swear that their fund manager knows better than the market because they've had a few good years, but given how many thousands of managers/funds are out there that's always going to be the case. There's plenty of evidence that over the long term (which is what we're concerned with here), managed funds don't do any better than trackers, in fact slightly worse because of their higher charges. I work in financial services for a company that has a large fund-management arm so should really be cheerleading managed funds as we make more money from them, but to be honest I think they're a waste of money.
Roger Irrelevant said:
IMO the two best bits of advice you can get when investing long-term via funds are:
1: Don't just do something, sit there; and
2: You get what you don't pay for.
1 means that if you're in a fund with the appropriate level of risk for your circumstances then you should simply stick with it through thick and thin. Lots of people change if their fund has a couple of bad years but you should instead see it as an opportunity to buy units while they're cheaper. If you sell units in one fund when everyone else is doing the same, and buy units in another when everyone else is doing the same, then even with single-priced funds you're chipping away at your returns each time you do this.
2 means you should actively seek out funds with lower charges. The cumulative difference over twenty, thirty years between a fund with 1% charges and one with 0.5% charges is considerable. In practice this means tracker funds - for example the total charge on the tracker fund I invest my pension in is 0.12%. Lots of people will swear that their fund manager knows better than the market because they've had a few good years, but given how many thousands of managers/funds are out there that's always going to be the case. There's plenty of evidence that over the long term (which is what we're concerned with here), managed funds don't do any better than trackers, in fact slightly worse because of their higher charges. I work in financial services for a company that has a large fund-management arm so should really be cheerleading managed funds as we make more money from them, but to be honest I think they're a waste of money.
Good advice, I'd add the following:1: Don't just do something, sit there; and
2: You get what you don't pay for.
1 means that if you're in a fund with the appropriate level of risk for your circumstances then you should simply stick with it through thick and thin. Lots of people change if their fund has a couple of bad years but you should instead see it as an opportunity to buy units while they're cheaper. If you sell units in one fund when everyone else is doing the same, and buy units in another when everyone else is doing the same, then even with single-priced funds you're chipping away at your returns each time you do this.
2 means you should actively seek out funds with lower charges. The cumulative difference over twenty, thirty years between a fund with 1% charges and one with 0.5% charges is considerable. In practice this means tracker funds - for example the total charge on the tracker fund I invest my pension in is 0.12%. Lots of people will swear that their fund manager knows better than the market because they've had a few good years, but given how many thousands of managers/funds are out there that's always going to be the case. There's plenty of evidence that over the long term (which is what we're concerned with here), managed funds don't do any better than trackers, in fact slightly worse because of their higher charges. I work in financial services for a company that has a large fund-management arm so should really be cheerleading managed funds as we make more money from them, but to be honest I think they're a waste of money.
For assets where the bulk of the return arises from market beta (equities) then I'd agree that tracker funds make most sense. On the other hand, absolute return strategies and to some extent credit strategies certainly benefit from more active management.
Roger Irrelevant said:
IMO the two best bits of advice you can get when investing long-term via funds are:
1: Don't just do something, sit there; and
2: You get what you don't pay for.
1 means that if you're in a fund with the appropriate level of risk for your circumstances then you should simply stick with it through thick and thin. Lots of people change if their fund has a couple of bad years but you should instead see it as an opportunity to buy units while they're cheaper. If you sell units in one fund when everyone else is doing the same, and buy units in another when everyone else is doing the same, then even with single-priced funds you're chipping away at your returns each time you do this.
2 means you should actively seek out funds with lower charges. The cumulative difference over twenty, thirty years between a fund with 1% charges and one with 0.5% charges is considerable. In practice this means tracker funds - for example the total charge on the tracker fund I invest my pension in is 0.12%. Lots of people will swear that their fund manager knows better than the market because they've had a few good years, but given how many thousands of managers/funds are out there that's always going to be the case. There's plenty of evidence that over the long term (which is what we're concerned with here), managed funds don't do any better than trackers, in fact slightly worse because of their higher charges. I work in financial services for a company that has a large fund-management arm so should really be cheerleading managed funds as we make more money from them, but to be honest I think they're a waste of money.
This is good advice. I've realised all my funds were charging 1.9%, looking a bit deeper, it seems there's a standard charge of 1% with Aegon / SE, plus whatever the fund has (or something to this effect). On that note, I've switched existing funds and future contributions into1: Don't just do something, sit there; and
2: You get what you don't pay for.
1 means that if you're in a fund with the appropriate level of risk for your circumstances then you should simply stick with it through thick and thin. Lots of people change if their fund has a couple of bad years but you should instead see it as an opportunity to buy units while they're cheaper. If you sell units in one fund when everyone else is doing the same, and buy units in another when everyone else is doing the same, then even with single-priced funds you're chipping away at your returns each time you do this.
2 means you should actively seek out funds with lower charges. The cumulative difference over twenty, thirty years between a fund with 1% charges and one with 0.5% charges is considerable. In practice this means tracker funds - for example the total charge on the tracker fund I invest my pension in is 0.12%. Lots of people will swear that their fund manager knows better than the market because they've had a few good years, but given how many thousands of managers/funds are out there that's always going to be the case. There's plenty of evidence that over the long term (which is what we're concerned with here), managed funds don't do any better than trackers, in fact slightly worse because of their higher charges. I work in financial services for a company that has a large fund-management arm so should really be cheerleading managed funds as we make more money from them, but to be honest I think they're a waste of money.
20% - BlackRock UK Smaller Companies (still 1.9% charge)
80% - Scottish Equitable Ethical (1% charge)
I like the ethos of these funds, as well as the breakdown of asset classes (mostly equity, and split reasonably between FS, Tech, 'Consumer Cyclical', and industry). They've both performed well over the last few years, and seem to be well regarded. I think I'll be happy to sit on these for 5 years and see how it goes, and (for now at least) stop wondering what if anything I should be doing with it.
rsbmw said:
This is good advice. I've realised all my funds were charging 1.9%, looking a bit deeper, it seems there's a standard charge of 1% with Aegon / SE, plus whatever the fund has (or something to this effect). On that note, I've switched existing funds and future contributions into
20% - BlackRock UK Smaller Companies (still 1.9% charge)
80% - Scottish Equitable Ethical (1% charge)
I like the ethos of these funds, as well as the breakdown of asset classes (mostly equity, and split reasonably between FS, Tech, 'Consumer Cyclical', and industry). They've both performed well over the last few years, and seem to be well regarded. I think I'll be happy to sit on these for 5 years and see how it goes, and (for now at least) stop wondering what if anything I should be doing with it.
I think you need to differentiate between fund investment fees and the ongoing costs of the pension vehicle (to recoup set up expenses and commission, ongoing admin fees etc).20% - BlackRock UK Smaller Companies (still 1.9% charge)
80% - Scottish Equitable Ethical (1% charge)
I like the ethos of these funds, as well as the breakdown of asset classes (mostly equity, and split reasonably between FS, Tech, 'Consumer Cyclical', and industry). They've both performed well over the last few years, and seem to be well regarded. I think I'll be happy to sit on these for 5 years and see how it goes, and (for now at least) stop wondering what if anything I should be doing with it.
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