Revealing my 5yr Investment Returns (benchmarks) - How do yours compare?
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- Опубликовано: 25 июн 2023
- Working out whether your pension fund has performed well or not can be challenging. In this video, I show you the benchmarks I like to use to track performance so you can compare them with your own.
Always keep in mind that past performance - although interesting to look at - does not tell us much about how investments may perform in the future.
Benchmark Performance Figures & Guide
bit.ly/3pkgpVP
Financial Planning
I am a Chartered Wealth Manager and Partner in a financial planning practice based in the UK. If you would like to find out more about our services, please follow this link: go.novawm.com/getintouch
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Let me know if you find this useful and I'll do it again in the future. If I do it again, how could it be better?
I think a section on how comparable funds compare to the benchmark to illustrate how similar they are might be useful as it’d give more concrete examples of etfs vs global benchmark. Appreciate this is somewhat similar to the point on al world ex uk. I.e comparing the global all cap vs Vwrl vs hmwo to show how all these very similar indices compare.
I see this mostly as an extension on your all world ex uk point so people can get an idea of variance their funds may see
@@mulberryellie8378 Thank you for the feedback. Yes I think the simplest way to track performance is to look at the Fund Fact Sheet. These are normally release every month or quarter.
I'm slowly going through your videos, really good stuff I must say 👍👍
Did you do a video on the tools you use? I don't have any decent tools to analyse my portfolio as a whole.
If not, I think it would be good video to show what tools you use and ones we can use to get the nice charts you show us.
Why don’t more SIPPs and DC schemes allow cash savings ? Why would I risk the stock market now when I can secure fixed income of over 6% in the cash savings market ?
What about the great rotation that’s taking place ? I mean the rise of the East and the BRIC economies . The de-dollarisation of the world trading economy ?
What happens when the greenback is no longer king of the hill ?
Look at the size of US sovereign debt and the annual budget extensions that are rubber stamped through on Capitol Hill .
It’s all fake money since the day they abandoned the gold standard .
So bearing in mi d the huge US involvement in global trackers etc , can the party really continue for much longer ?
Understanding personal finances and investing will most likely lead to greater financial independence. By being knowledgeable about money and investing, individuals can make informed decisions about how to save, spend, and invest their money. A trader made over $350k in this recession influenced market
Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are alot of wealth transfer in this downtime if you know where to look.
The best course of action if you lack market knowledge is to ask a consultant or investing coach for guidance or assistance. Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since January, even though I know it sounds obvious or generic. I believe that is the most effective way to enter the business at the moment.Read more
@@maryHenokNft Please who is the consultant that assist you with your investment and if you don't mind, how do I get in touch with this person
I am going to look her up, I have about $81k i want to start with, might be small but it's better than nothing though. Since the 08 crash is playing out again.
Interesting stuff. My main pension pot (mainly stocks, risk 6/10) has dropped 2.92 % over the last 5 years , despite a huge recovery post Covid. It started crashing late in 2021. Slight recovery early this year then flat lining over the last few months. My financial advisor tells me this is typical and holds out some hope that things may pick up in the future. I'm just starting to wish I had made a career in the public sector rather than having to gamble with my future like this, with retirement hopefully some time in the next 5 - 9 years. By the way, does anyone know why public sector pensions are so generous, that the rest of us have to fund?
Public sector pensions are not what they used to be and have too been hit heavily in the past few years, remember though those lucky enough to have a public sector pension have invested heavily into it and sacrificed decent salaries throughout their career so let’s not have a pop at those with public sector pensions
Lots of public sector workers could make more income in the private sector. And personally I think I would really hate the lethargic culture of a PS organisation so I wouldn’t even consider going down that route personally.
@@oleksiymatviyenko Your story is inspiring. I’m 38 trying to achieve this goal you achieved. Share some tips please so others can actually learn.
@@andrewmorgan3765 This is very much the popular opinion, but was shown not to be correct. The average public sector salary is higher than the average private sector salary. It swings in the favour of the private sector when bonuses are added in, but then swings back in favour of the public sector when employer pension contributions are added on. This was on the BBC about a year ago.
My partner got a job in public sector and will be receiving DB pension. The retirement age for that DB scheme is the same as state pension age. Currently 65 going up to 68 and there are voices it will be up to 70 in a future. Good DB schemes are long time gone.
Now instead of asking why public setor pensions are so generous, you could ask: why people of Britain do not hit the streets in the protest against ever increasing retirement age? It's absulutely nuts, said the French.
The flat section in the last two years helpfully coincides with when I switched jobs to one with an excellent pension scheme, and have been pumping loads into it.
I keep telling myself that in the future, this will be great. Pumping lots of money in, fairly early in my career, when the markets are "down". But right now I have to say that the performance plots arent very satisfying to look at!
Another excellent video, James. A great summary of why you need to compare your performance to a benchmark and which benchmark to use, together with a good explanation of why risk and volatility are important factors when reviewing performance - all in 10 minutes!
Thank you, I'm glad you think so!
Thanks James, this explains why, since joining my latest company pension 2 years ago, it's only worth what has been put into it. Maybe it's not as bad as I thought it was!
From the perspective of a UK investor, the stock market has been flat for the last 18 month. Bonds however have continued to take a beating.
@@JamesShackspot on James, my pension was being invested in the default lifestyle setting by the company. 72% in a consolidation fund that was heavily bond and gilts this was losing hand over fist. 28% in a growth fund more equity focussed.
I have reworked away from the default as I am planning on this fund not being touched for 5 years or so and using other pension pots
Hi James. Thank you for this. I follow a number of you here, all good info. I have already passed 60 and will be retiring in around 7 months time. For the first time I have just done a review of my DC pensions. Used a website that gave FE Fund Risk scores, overall quartile ranks in class and how that has moved over time, the same for volatility and as you said looked at asset allocation. Went away from their underperforming quartile funds because of this, but also moving towards a percentage that I will need of cash and near cash resources, so have mixed asset high share percentage funds as well as fixed interest and money market funds. So looking for long term growth riding out the bumps as well as ensuring cash when needed.
You are about to retire and have only just done your first review of your DC pensions? I suggest you've left it very late and people shouldn't be copying that.
@@owensmith7530 Lol. I hope that you've watched a number of James's videos. Most people are in Default Lifestyle DC pensions. On average I could live for 25 years so by doing something now I will hopefully improve the performance of this pension over the next 25 years and you can make small contributions if you want to. I will guess that like a lot of people COVID made people re-evaluate what's important and with other pensions as well as I have been working over 40 years, it is actually never too late to plan. Hope this helps.
That was really interesting thank you!
Glad it was helpful!
👍Interesting and useful.
A very helpful subject. You mention about diversifying a portfolio which to me is a great idea and I would like to invest more in China and India in an index fund, however most global funds or even ones concentrating in Asia still only seem to invest a very small amount in these two massive countries. Is there a reason for this? I am not looking for financial advice by curious.
Doing pretty well overall. 47.5%. All USA equities in index funds and ETFs until May 2022. Currently about 75% USA equities and 25% USA 5.07% money market waiting for opportunities. Thanks for the video!
I couldn't work out what was going on with mine so when I started a new job at the end of last year I pulled my own pots from LGPS, Scottish Widows, Aegon and NEST into a SIPP. My current employer uses Scottish Widows and is invested in their Pension Portfolio One. It's been up 30% overall in the last 5b years but that's due to an exceptional 2020/2021 at 34%. The average for the other 4 years would be negative. Hopefully, my own fund picks in the SIPP will fair better. I'm 40 this year though so time is on my side. Edit: Just found out that I can now switch from the Scottish Widows PIA (Pension Investment Approach) to choosing my own so will see what funds are available. I hadn't seen that before today.
Great content! James, would be nice if you prepared a video on investment in conglomerate shares like BRK B as an alternative to ETF investing. Some countries (like Ireland) have very penalising tax rules on ETF returns (even if undistributed) which makes them less attractive. BRK B has consistently outperformed the S&P 500 for the last few decades and, therefore, they may be seen as an ETF proxy. Would be great to hear your views on that strategy.
Hello James. Excellent video. I tried to do my own overlays. FTSE All Cap Index was easy to find but the Bloomberg wasn't as there seems to be many. Would you advise which one I could use or is it not that simple? Thanks.
I’ve started tracking the unit prices rather than the total value to get a better sense of the performance.
I do this too although if you also have reinvested dividends I don’t think this gives the full story?
Thanks for the video, James. Very informative as always! I'm on a 60/40 ratio but I'm underperforming your 5 year estimate at around 17% rather than 25%. I think it's because I have a larger allocation of UK stocks and bonds, not just a global index. This is because I read advice from another source (Andrew Hallam) that it's good to have extra allocation to your home market. I was wondering if you agree with this advice? Thanks very much for any thoughts. Alex.
Hi James,
I watch your You-Tube videos with interest and have taken on a lot of your advice, particularly regarding pensions and investments.
I am 52 years old and using the information in your videos I thought I had a retirement plan! My pot was £550k and growing (Jan ’22) and in very brief and simple terms; if at 55 it was £600k and would return a conservative 5% I would be comfortable on a £30k pension.
However, the majority of my pot is in the now closed Rolls-Royce final salary pension. In Jan ’22 this had a transfer value of £490k, but since then it has been consistently reducing month on month and the transfer value is currently calculated at £209k! I have contacted the RR pension fund to find out why it has reduced so much when it is supposed to be such a ‘safe’ investment, (my other pensions/SIPPs reduced, but only by 15% or so, and have now recovered). Their reply was that the RR pension annuity had not reduced any so my pension is safe. Unfortunately, I do not want to take this annuity as I want more money when I am a younger retiree and the calculated £9k bridging annuity they are offering does not suit my plans!
I am imagining there are a lot of other people around my age with company pensions in a similar position - there certainly are a good few within my workplace. Do you think there would be enough interest to do a video on it? Explaining how gilts work and why they have fallen so much. Will they recover? And what are my and others in my position options, if any?
Hi John
It sounds like you are in a Defined Benefit pension as opposed to a Defined Contribution pension which is what I discuss in this video.
A final salary pension guarantees to pay you out a fixed amount each year upon retirement, this amount won't change (and may even go up in line with inflation), and that is why they are seen to be safe pensions.
The scheme guarantees that they will pay out that income, but there is not a pot of money sitting behind it that is specifically dedicated to you.
What you have is a guaranteed income for life. However, DB schemes sometimes give you the option to transfer this guaranteed income for a cash value into a defined contribution pension.
The value they offer you is based on how much it would cost to replicate that guaranteed income on the open market. Annuities are what they use to quantify that value as an annuity is essentially like a DB pension in reverse, you pay a lump sum to get a guaranteed income for life.
As interest rates have risen, so have annuity rates which means that the lump sum required to by £xx,xxx per year of income has fallen dramatically.
If interest rates fall back to where they were, annuity rates will probably fall back too but we don't know if or when that will happen.
Fantastic video
Hi James, if there is one thing this shows, and that is the sense it makes to keep any DB pension scheme you may have rather than cash it in to then invest in your personal DC scheme. My benefits in this have risen nicely over the last few years especially the 25% tax free sum I’ll be taking. 42 to 49K in the last 2 years and with two years still to go hopefully some
More gains still
James v helpful as always - my only point would be given how well the US has done for decades wouldn't most investors do better with greater US exposure in stocks
I currently work place pension is only 3k in and its in aviva my futer growth XE so no idea stocks to bonds ratio ? Any Aviva funds you recommend as notice they have blackrock ones etc.
My old on has 11k in and i I keep thinking should i put it into a sipp with vanguard on lifestrategy 80 or into all world index.
My old pension thats sitting there is only predicting 18k at retirement and is in B&CE GI with the people pension.
Any recommendations welcome and appreciated
Would you recommend keeping your person portfolio invested in 1 fund or is it better to spread over 2/3? Do you have a video on it?
About 5.79% over the last 5 years, im happy with that performance as ive managed my own funds.
Hi James are fixed bonds a good option at the min? There are some great rates out there?
Any thoughts on mixing equities with some cash funds (e.g. Scottish Widows Cash Pension) rather than bonds? With increasing interest rates the returns are looking reasonable and the risk is lower than bonds, which have mostly underperformed recently.
In your opinion, is there any value to retaining some "home country bias" to weighting of your portfolio?
James, i just want to say thank you so much for all the advice you share with us.
As a 25 year whos self employed youve really helped me think about my future and retirement, i recently opened a SSIP and am now saving consistently and with a better understanding of my investments.
Top man 👍🏼
You're very welcome and best of luck with the investing!
Here here!
Are there any good tools to track performance over time when dealing with a custom portfolio with rebalancing transactions? At the moment I put all my transactions in Morningstar and use the performance tab - but I don't have the x-ray option due to the fact its really for professional investors (and therefore costs huge amounts). There doesn't seem to be any tools in the middle ground, where I have a SIPP with my own investments, which I rebalance annually and just want to be able to make sure my asset allocation and performance is keeping up appropriately with a benchmark. ii give you the ability to use x-ray on your portfolio but it doesn't consider changes in portfolio due to rebalancing.
2017 returns are around 7% av per year from vanguard not bad for 2 mini recession and correction. 🇬🇧
SL Vanguard US Equity Pension 100% stock thank you for letting me know the appropriate benchmark :-)
That would mean your pension is only invested in the US. It's not globally diversified so a US benchmark like the S&P 500 would be a better comparison.
Very interesting. I've been adding to my workplace pension (with Scottish Widows) since 2007 (16 years) and currently between me and my employer ~£300k has been paid in and the pot is now worth just just over £500k, so it has gained £200k. I'm planning to retire soon'ish. Until 3 years ago I was invested in default funds which were mostly NA equities. These were doing OK, then 2 years ago they dropped off. Since then, I've reallocated the funds and now I'm invested 55% global equities index fund (which has been pretty much flat) , 10% Japanese equities (which have done well, up ~15%) and 35% into cash funds, currently giving a steady return. I'm glad I didn't heavily invest into some of the "low risk" bond funds offered by Scottish Widows, since they dropped ~20% last year after the Lizz Trush fiasco and have not yet recovered!
Once I retire I'm planning to move from Scottish Widows to a SIPP (maybe with Interactive Investor) to reduce the annual fees and then go to flexible draw-down.
I would love to see a video on leveraged funds. It's one of those tricky investment tools. For example, if you have a 100% stocks portfolio following an index if you commit to keeping your money in this account through wind, sleet and rain, would you have just been better off going with a 3x leverage ETF following the same index?
Think it wouldn't work. The losses hurt you more than the gains help. First of all, even if it's leveraged 2X, a once in a lifetime crash of 50 percent could wipe everything out for you. Why risk it. If it was a good idea, everyone would do that.
Also just imagine some fund that increases by 5% one year, then decreases the same amount the next, and repeats every year. So multiply by 1.05 then 0.95. After 20 years, so 10 years each, it would be worth 97.5% of the original value.
Now consider the same fund but leveraged 2x. This would be worth 90 percent. A 3 times leveraged find would be worth 79%. And imagine with real historical returns of any index. Very dangerous imo.
My workplace pension is in the Nest Sharia fund, the default was about 40% bonds. The Sharia is the only 100% stocks option. 14% 5 year annualized but I think NEST take 2% on each deposit, still getting the instant return from the employer match though but don't add a single penny extra. The rest goes into ISA for me, I do have a SIPP and LISA but plan on retiring before 57 anyway all being well. I may add more to those later on depending on how things are going.
Yes NEST has an inbuilt fee levied with every investment as part of the payment to the government for setting it up. Like you I basically pay the default contribution, company will not match any extra contributions so any extra pension savings goes into my ex company Aviva scheme
Really like this one. I must admit it is easy to get obsessed with pensions especially at my age of 53. My pension has about 40% international equities and 22% UK equities and 16% bonds. The rest is others like cash and managed funds. My unit value at 2017 was £11.35 and now its £14.00. I am interested in your view of its performance.
Take a look at the guide in the description of the video. That should give you some ideas.
Hi James, very useful video! Just wondered if you'd recommend switching the Vanguard LifeStrategy 80% to the example you've given (even just temporarily) on the basis UK stockmarket is underperforming? Cheers
That would involve moving up the risk scale which is something that you may not be comfortable with.
I can't make any personal recommendations as I don't know your full circumstances.
@@JamesShack thanks James, appreciate your time, I see what you mean about increasing the risk. I'm early 40s and glad to be financially stable in terms of zero mortgage and reasonable savings. Comfortable with the 80/20 ratio but perhaps a riskier spread of stocks aren't for me. Let's hope the market improves over the next 10 years, like you say it's more about "time in the market" 😊 keep up the fantastic channel! Perhaps a short video about spreading a lump sum across multiple fixed term savings accounts would be worthwhile? Will let you know if I can think of anything better. Thanks again 😊
I have an investment in Vanguard Lifestrategy 100 ETFs which initially I thought would give me an easy, broad international spread. But then I learned that LS100 is different in each market where it operates; in that it is skewed to include a higher proportion of local content. In my own case this means my LS100 (which I'm otherwise happy with) includes a higher proportion of UK stocks, which I could see were underperforming. So to reduce my exposure to that underperformance I switched some of my LS100 investment into equal amounts of Developed World *Ex UK* and to plain vanilla S&P500. For me, it's been a good thing to have done (so far...)
The benefit of LS funds is that they are a single portfolio fund, which makes decisions very simple. You don't have to decide which fund you're going to invest in each month.
If you don't like the UK overweight, as an alternative, you could buy another global index tracker that's allocation matches the global make up of equity markets. That would keep thing simple.
That's not a personal recommendation mind you!
Great video. I'd also point out that over a multi-year timeframe, the exchange rate can make quite a difference on returns. For example Vanguard's popular S&P 500 ETF "VUSA" has returned 7.23% over the past 1 year, whereas the S&P 500 itself has returned 11.31%.
The longer your investing horizon, the more this balances out over time, however it's still worth mentioning if you're not using a currency-hedged product. Same with global funds that are USD denominated.
Hi James,
Thank you for sharing your financial knowledge online with me. I’m much more wiser than I previously was all because of your contents on RUclips.
My son is 10 and has £30,000 in his JISA with Halifax.
Where and how can I grow this money. My financial goal for him is to save atleast £100 every month until he turns 18, convert this JISA to a pension. So, it’s going to be a long term investment that might be accessed ONLY when he retires.
I have watch your videos on Vanguard fund. Do you think Vanguard JISA stocks and shares (specifically Life strategy equity 100%) will be a wise move?
Kindly advise.
My Royal London fund was not only under-performing, it was losing money i.e. the fund value is less now than it was three years ago, despite me adding 15% of my salary to it every year since then. This is for two reasons - considerably more than 4% of the stocks the fund is invested in are in the UK (RLP Global Managed Fund is 39% UK, 33% North America), and as it is a lifestyle fund, and I am approaching retirement in 7 years time, a large percentage of the fund is in bonds. The UK stock market has performed poorly for years, and bonds have reduced in value considerably recently. I'm transferring away from Royal London now because, frankly, they shouldn't allow the fund to fall year on year without taking any action (especially since I was in the default pension fund).
Yes to me it’s the fund systems seemingly just churning away they get paid anyway. I have a modest pot with embark and it looks as though they just buy and sell into various funds to earn the company commission. Or am I just being cynical
I have the same with a pension with Royal London as well. Diabolical performance of late.
I was reviewing my pension in April companies don’t want us to build wealth they want us to take on low risk so employees don’t scream and shout when they can’t handle a recession 90% of pensioners are on the wrong fund
I am with them & 7 years from retirement too. Its performance in recent years has been dire.
Hi James, could you please do a deep dive into the idea of a Permanent Portfolio (regardless of the economic climate) and its performance over the years, as popularised by Harry Browne:
25% CASH - such as a Money Market Fund
25% GOLD - Ideally allocated physical gold or ETF based on physical gold
25% BONDS - Government Bonds/Gilts
25% STOCKS - Stock Index (FTSE100/S&P500)
The portfolio would only be rebalanced back to 25% each if any one investment falls outside the 15 - 35% range.
In this portfolio, you are not trying to beat the market, but getting whatever the market returns.
An interesting assessment, but the problem I have with measuring performance of my portfolio over time is that I an regularly adding to it. Employer and employee contributions to my pension on a monthly basis , plus an annual full contribution to a stocks & shares ISA. Any thoughts, James?
Find the fact sheet of the fund you are invested in. That will show you the past performance.
Very few people have static pension values because either, they are still investing e.g. from income, or if retired, they may be using drawdown. So, do you have any suggestions for how best to assess growth when the capital invested is changing. This is a little easier to segregate for transfers-in, or for lump sums in drawdown, which should be only a small percentage per annum but that could still skew the overall figure, especially when viewed over the medium or longer term 3-5 years plus.
Find the fact sheet of the fund you are invested in. That will show the 5 year performance. Or are you invested in several funds?
@@JamesShack It's several funds in my case. I saw after commenting that someone else suggested tracking the values of the individual funds, rather than the investment values and I think that should work for most people. Thanks for the response.
I have a LGPS pension (working in a school) not sure what they invest in, any ideas how to check?
This is really interesting James. I have sort of been doing this for the last year or so, just checking my pension against the Vanguard 80% equities lifestrategy fund (similar allocation to my pension, and effectively treating this as a benchmark of sorts). But interestingly I notice that has a 30% return over 5 years which is less than your example. Does that mean the Vanguard fund is underperforming or does this fall within your example of a few percent over five years not necessarily being anything to worry about?
Vanguard LS has a very high UK weighting, that's why.
Yeah I did wonder if that was a factor. Interesting though, as I'd always thought of it as a bit of a gold standard, so if my pension was keeping up with it then it is probably doing OK. But as it happens my pension isn't UK biased so maybe does suggest it is slightly underperforming. Which is why this video is so useful, I'd not really stopped to think about that before.
@@-RUclipsr_Bot.
Hi James, my pension is LGIM Tesco Growth Fund (Fund ID: BYT3). Which benchmark should I be judging it against? Thank you
No idea what this means, thanks anyway
@jamesshack what brand of t shirt is that James. Looks good.
Haha. I think it’s this one :www.uniqlo.com/uk/en/product/uniqlo-u-crew-neck-short-sleeved-t-shirt-461556.html
James, thanks for continuing to put out great content.
My story is I moved previous pensions off Scottish Widows and into a SIPP wrapper. I spent ages researching and finally came up with an asset allocation I'd be comfortable with (100% Equities) and distributing the portfolio across a few passive funds. I set clear guidelines on percentage allocation and neatly rebalance when required (once a year or so). The FTSE Global All Cap Index is my closest benchmark, but I have tilted allocations more towards Small Cap, EM and FTSE250. I track the portfolio as I monthly contribute.
After all that effort, I did a comparison with the benchmark as per your video and they are pretty much the same with the same risk score. I'm going to take some time to ponder over the findings but I'm starting to think the one passive fund is appropriate for my needs and forget about the work involved I have to do to rebalance.
Thanks for challenging my assumptions, making me think about my process and the ultimate decision I made.
Simplicity is often the best option!
Hi James, I'm shocked at how poorly my pension has been performing, compared to the benchmark. I've know for some time, but just thought it was market conditions and all were suffering. Do you have any videos on approaches to migrating existing investment, as the majority of my pension is in a dormant scheme.
Have you checked to see what level of risk your pension is currently invested at?
@@JamesShack The pension site shows the fund (LGIM Global Equity Market Weight (30:70) Index) as top of their risk rating, but looking externally at the fund fact sheet, it only appears to be a 4.
Hi James. my husband who is now 70 has had a Royal London Pension for 5 years with no added funds.
It's a managed fund that was started in 2018 by transfering an existing low performance private pension across to Royal London. It is in their Portfoilio 1, a managed fund which is there lowest risk fund. After an encouraging upward initial start it has now lost 30k and is now showing (with losses) just 2.7% growth in 5 years and only 1.6% growth in the last 12 months. Panic mode has now set in. What should we do? Maybe move to a less Bond dependant fund with more Global Management like their Portfolio 4 ? We would be most grateful for any advice you could give.
Hi - if you are looking for advice, there is a link in the description of the video where you can find out more about the services my business provides.
Hi James, I am invested in the L&G PMC Multi-Asset 3 (Fund ID: NTW3) which would be the best benchmark to compare with? Many thanks
This fund has a target exposure of between 40% and 85% stocks.
It has 40% invested in stocks plus a bunch of other asset classes like alternatives and high-yield debt, so it would sit somewhere near the 60% equity benchmark.
I’m Fidelity risk Group 5
Wife risk group 4
She has more bond exposure which apparently explains why her value has dropped slightly more. The higher the risk seems to have benefited for their lack of bonds ???
Correct typically higher risk fund has more into equities, there is more volatility but in the last couple years stock market has been climbing steadily.
I don't know how to check the performance of mine it only displays the projection at retirement age. I can see the unit price is there a calculation to translate that into % from year to year?
Can you find the factsheet of the fund you're invested in?
@JamesShack No the only information I could find was it's up to 85% shares. I get annual statements with current pension value, could I compare the different values year on year and get the performance that way?
If you’re in a company scheme that’s invested in a 60/40 that isn’t performing, at what point do you switch to something else? Or should you just change investments from this point on and leave previous to recover?
If a fund has underperformed, it does not mean that it's more likely to the outperform in the future and catch up with the rest.
Hi James. I.m approaching early retirement so I've begun shifting my portfolio's emphasis to increase the fixed-income investments I hold. Since April, I have bought the following Bond funds. I want to use benchmarks to know which ones to build up. Is there a single benchmark I can use, or should I use multiple benchmarks? The funds are Vanguard UK Govt Bond Index, Vanguard UK Inflation Linked Gilt Index, Vanguard UK Investment Grade Bond Index and Vanguard UK Long Duration Gilt Index. I also hold some funds in Vanguard's 80-20 LifeStrategy Fund.
These are all index funds, so they each should be tracking very closely to their own benchmarks.
They are also all UK based funds, any reason for that?
If you are trying to decide which bond funds to invest in, that decision should be based on your own cashflow needs. The cash you plan to take in the short term, should be in shorter duration funds (average maturity of the bonds in the fund), where as for cash that you can keep investing for longer should be allocated to funds that have longer durations.
@@JamesShack Thanks. Only reason for UK bias in my initial bonds portfolio is price. UK bonds seem to be on their knees at the moments so I’m hoping I’m buying some bargain funds. 🤞 I’m happy my equities portfolio is nicely globally diversified. I’m also waiting to hit 55 to see what the Annuities returns look like then. May be a better way to secure more income (on top of by DB pension) than bonds, the rest I can then stay in equities as cash flow would be practically sorted).
The last few years have been rough? I'm looking at the bog standard funds since covid and it looks like they've exploded. Is there something II'm missing?
What's a bog standard fund?
Portfolio is (US ex-pat)
401k - about 10% per annum (after fees)
Direct investment stocks CPGA - about 35% per annum
Cash/Near cash 1% (current 4.9%$
Property - mark to market 12% (5 x leverage so 60% ROCE)
Mix
401k 40%
Direct stocks 30%
Cash 10%
Property 20%
So … 24-30% per annum before tax treatment on about a 3Mm portfolio
Target 10MM by 2030
Hi James, I am only at 3 years of investing in Vanguard life strategy 80/20 so is it not worth me waiting until the 5 year mark to compare?
The LS funds have almost identical returns to these benchmarks.
Hi, are those percentages before or after fees?
After
Work pension Standard life sustainable multi asset (pp) fund and it’s been terrible 😢
Can anyone suggest experts like James but for people in the EU ? I wanted a consultation with him but in his site he states he cannot work with people outside the uk
An interesting video, but how best to take account of DCA when looking at this? For instance my pension I've contributed to it for the last 8 and a bit years and I'm up 8%, so on face value I'm wayyyyy behind, but then I've had contributions in the last few years which have lost money dragging my returns down
You look at the fund fact sheet of the fund you're invested in. This will show you the return the fund has achieved irrespective of when you invested.
Depressing that I've only got data from November 2021 when my employer moved to a new provider (L&G) and that shows my pot, 100% in stock funds mimicking the FTSE Global Index is only up 5.97% 😲 These last few years have been *awful*.I can only a period of 45% isn't far away !
L&G PMC UK Equity Index 3, L&G PMC World Emerging Markets Equity Index 3 and the majority in L&G PMC World (Ex-UK) Equity Index 3
6% in 18 months is far from awful. If you find that depressing I’m not sure you’ve got the right temperament to be invested in equities.
I prefer MSCI World ETF which contains large and mid caps from 23 developed countries.
Hands up who owned aapl 5 years ago and still holds them now
VOO all the way
Basically, those graphs just show that anyone looking to invest for 5 years or more should put it all in stocks and shares. There is no 5 year period where bonds out perform stocks. If you have an absolute deadline where you have to withdraw the funds then maybe de-risk for the final 2 or 3 years, as that's the max length it takes for a recovery. BUT, no one (except anyone odd enough to buy an annuity) should even do this type of de-risk, as your pension is most likely to remain invested in the market for your entire life.
Quite why pension companies start to de-risk funds 10 years from an employee's intended retirement date is bizarre. I can only think it is to cover themselves in case 3 Credit Crunches happen in that 10 year period with the successive ones blocking the recovery from the previous ones. For that to happen, we're probably in an apocolypse where money has no meaning. :)
Bonds have beaten the stocks over some 10 or even 20-year periods. But it doesn't happen that often.
The real question that you need to ask, as a long-term investor, is whether you can stomach the volatility and short-term pain that comes with a 100% stock portfolio.
@@JamesShack Thanks for the response. It would be interesting to know:
1) When those periods have been in the past?
2) Did the bonds outperfom stocks at those times by as significant a margin as stocks usually outperform bonds?
3) What caused bonds to outperfom?
4) Can future periods be predicted?
Regarding the volatiIity, the graphs you show indicate that Bonds and Stocks both go up and down at the same points in time. The two overall trend lines are both upwards, but at a slower rate for bonds.
I guess I'm saying that yes I can stomach short term losses knowing that there has never been a time when they haven't recovered. Is there a true risk, given a 100% successful historic recovery rate? Unless you are a short term invester.
What's the longest time that a widely used global fund has taken to recover? Reading articles on the 2008 crash, typical UK focussed fund recoveries ranged from 7 to 47 months with annualised returns over the 15 year period including bust and recovery averaging about 1% above the FTSE All Share's 5.58% pa recovery. While 5.58% or even 1% above that isn't a great return, this is from the worst possible peacetime starting point in living memory.
Once we can get BTC in our pensions they will finally all perform how we'd hope.
-5% on my SIPP 😂
I'm in my default workplace Aviva pension fund which is the My Future Focus Growth. I'm going to estimate from the asset allocation that it's 80/20 but it's 5yr performance is only 22%.
Looking at the geographic allocation the max is in the US at 37% and the UK is at 8.5%. I"ve got a developing europe allocation of 15.5%
Based off that I'm inclined to believe that I should look at changing the funds to maximise returns. I'm only 43 so time is on my side and I'm not in a rush to move to safe investments. I have shortlisted a few funds to review and now I've got this "cheatsheet" I'll be able to review them more efficiently.
S&P 500, hard to beat it’s performance and fees. Keep it simple.
True, just hope it’s not overvalued don’t fancy waking up and it’s down 50%😂
I wander why anyone would build a retirement allocation plan considering an investment in bonds. Especially going into retirement. The Blomberg global aggregate bond index is down by -9.5 %. over the last 5 years. No thanks.
Diversification dilutes returns. It does lower risk, but also lowers returns.
well this just isn't true 🤣
@@CaliToTheCrowd really? Am looking at an 11x from one of my stocks. My etf has barely done 20% in same period.
My L&G workplace default pension (and my standard life one) have performed only 3% in 10 years!
Recently moved all into L&G PMC BNY Mellon Global Income 3 (Fund ID: B2O3). Hoping for (much) better returns from higher risk, and semi-sensible fees.
I spent a while trying to find a fund that was 100% equities, high risk (6 or 7) and not Sky high fees. This one was the best I could find to my ability. Hopefully, a move in the right direction.
JAMES - IS THERE A WEBSITE YOU CAN RECOMMEND WHERE YOU CAN COMPARE TWO INDICES AGAINST EACH OTHER E.G. FTSE Global All Cap vs FTSE World Index?
James my pension is only invested into the vanguard lifestrategy100 fund what only yields 1.96% is that to low and should I be looking for something a bit higher or is the fact that i have another 35 years of investing into it kind of makes what it yields just now irrelevant
1.96% will be the dividend yield. You should also get capital growth above that, which is often substantially higher.