Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error

What have I done?
Kaiser00
Posted: 21 March 2018 15:07:11(UTC)
#1

Joined: 20/02/2018(UTC)
Posts: 7

Was thanked: 2 time(s) in 2 post(s)
I’ve just gone and changed my Fidelity pension fund allocation from 60/40 Growth (UK-60%) worth 120k.
To Fid Ethical U.K 30%, Fid European 25%, Fid Japan, 25% and Fid Emerging 20%.

Do you think this is a sensible allocation? I have a deferred final pension salary covered for 13k/yr. I’m 47 by the way. Also a current company pension with 15k going in each year.
Mr Helpful
Posted: 21 March 2018 15:37:50(UTC)
#2

Joined: 04/11/2016(UTC)
Posts: 580

Thanks: 662 times
Was thanked: 754 time(s) in 359 post(s)
Kaiser00;59097 wrote:
I’ve just gone and changed my Fidelity pension fund allocation from 60/40 Growth (UK-60%) worth 120k.
To Fid Ethical U.K 30%, Fid European 25%, Fid Japan, 25% and Fid Emerging 20%.
Do you think this is a sensible allocation? I have a deferred final pension salary covered for 13k/yr. I’m 47 by the way. Also a current company pension with 15k going in each year.


It can unsettle the investor and portfolio stability to make large step changes.

To what does the 60/40 refer ?
Stocks v Bonds?
If so Bond exposure has been removed!
That would be a savage change, but may be misunderstanding meaning of 60/40.
But if so leaves open for discussion whether at your age any defensives are appropriate?

As for the geographical Stock weightings, perhaps a little quirky with the world's largest market missing?
However you may feel about US Stocks and their valuations, that is a bold high-conviction decision which may or may not elicit sympathy.
Kaiser00
Posted: 21 March 2018 16:41:05(UTC)
#3

Joined: 20/02/2018(UTC)
Posts: 7

Was thanked: 2 time(s) in 2 post(s)
The 60/40 is all equities. The Fid global ethical does have a decent US exposure, but I agree I maybe a little light on US overall. Any thoughts on a sensible diversification allocation?
Tim D
Posted: 21 March 2018 17:13:13(UTC)
#4

Joined: 07/06/2017(UTC)
Posts: 381

Thanks: 1434 times
Was thanked: 586 time(s) in 252 post(s)
Kaiser00;59103 wrote:
The 60/40 is all equities. The Fid global ethical does have a decent US exposure, but I agree I maybe a little light on US overall. Any thoughts on a sensible diversification allocation?


I'm guessing you were in this then?

https://www.trustnet.com...-equity-6040-pensions-2

That claims

Quote:
UK Equities 55.70
Europe ex UK Equities 17.00
North American Equities 12.50
Japanese Equities 6.60
Asia Pacific ex Japan Equities 4.20
Global Emerging Market Equities 2.00
Money Market 2.00


I then clicked through to trustnet's charting and benchmarked it vs FTSE World. It looked like it had been tracking that nicely for as far back as trustnet has data for it to 2009... but it all went horribly wrong in mid-2016 (my suspicion would be the managers were blindsided by the brexit referendum outcome, hadn't anticipated a fall in sterling and had hedged their foreign currency exposure the wrong way).

How about you (Keiser00) tell us what you thought you were hoping to achieve from this move and then we'll tell you whether we disagree with your logic or not :^)
1 user thanked Tim D for this post.
mcminvest on 21/03/2018(UTC)
Kaiser00
Posted: 21 March 2018 17:33:23(UTC)
#5

Joined: 20/02/2018(UTC)
Posts: 7

Was thanked: 2 time(s) in 2 post(s)
Exactly that the U.K. weighting was a concern with regards to Brexit. So I thought a global diversification would be better going forward. Whether the allocation % are good or not I’m not sure. I’ve also started a monthly ISA with Hsbc global dynamic.
1 user thanked Kaiser00 for this post.
Tim D on 21/03/2018(UTC)
Jim S
Posted: 21 March 2018 17:43:43(UTC)
#6

Joined: 08/12/2016(UTC)
Posts: 223

Thanks: 378 times
Was thanked: 277 time(s) in 138 post(s)
So you changed the asset allocations of your existing pension and new contributions, rather than just new contributions only, right?

The old allocation would be much too high in UK for m,y liking & missing AP

The new one is a bit higher than personally I would like in UK, Japan and Emerging Markets, although arguably those are undervalued areas relative to the US at the moment

But best be clear about what you hold currently (including outside your SIPP, possibly not much if you only just started your ISA?)


1 user thanked Jim S for this post.
mcminvest on 21/03/2018(UTC)
King Lodos
Posted: 22 March 2018 04:50:16(UTC)
#7

Joined: 05/01/2016(UTC)
Posts: 2,720

Thanks: 589 times
Was thanked: 4132 time(s) in 1610 post(s)
I'd say it's a little high in Japan and EM .. Those can be two volatile regions, and they can have a tendency to throw out 10-20 year periods of very subdued or flat returns.

Valuations in US equities are high – but you're in some of the world's best companies, with the power of the Fed behind you.

I'd say the simplest way to go is the FTSE World – which puts you in the geographical allocations the market as a whole thinks best .. Then add extra Emerging Mkts if you want more risk/volatility

1 user thanked King Lodos for this post.
Tim D on 22/03/2018(UTC)
Kaiser00
Posted: 22 March 2018 08:16:33(UTC)
#8

Joined: 20/02/2018(UTC)
Posts: 7

Was thanked: 2 time(s) in 2 post(s)
That’s sound advice KL. I will have a look at that. Thanks.
1 user thanked Kaiser00 for this post.
King Lodos on 22/03/2018(UTC)
King Lodos
Posted: 22 March 2018 08:31:23(UTC)
#9

Joined: 05/01/2016(UTC)
Posts: 2,720

Thanks: 589 times
Was thanked: 4132 time(s) in 1610 post(s)
My pleasure .. You could also have a look at Vanguard's Lifestrategy allocations:

https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-100-equity-fund-accumulation-shares/portfolio-data

It's a pretty close analog to the world index, but they break it up and give you a slightly higher tilt to the UK for currency stability .. They're very sensible at Vanguard .. They won't go for big, bold decisions that might beat the market – they're just very good at avoiding mistakes and getting you very satisfactory results

PaulSh
Posted: 22 March 2018 08:43:40(UTC)
#10

Joined: 02/12/2014(UTC)
Posts: 96

Thanks: 22 times
Was thanked: 136 time(s) in 74 post(s)
You definitely want to be careful with Japan right now, what with the currently-emerging cronyism scandal over there. Worst case is that it could bring down the Abe government and "Abenomics" with it. Not that I'm a great believer in Abenomics as such, but losing Abe could really shake things up.

Another thing, I haven't checked the allocation to China in your new portfolio. I would avoid China like the plague as the whole country is basically a huge Ponzi scheme at the moment. I recently sold out of HFEL because I felt their Chinese allocation was getting far too high.
1 user thanked PaulSh for this post.
martin hargan on 22/03/2018(UTC)
+ Reply to discussion

Markets

Other markets