I've been perusing the available funds in my Fidelity work pension options. By way of an introduction to this post I've already decided on splitting my allocations as follows:
25% in a medium-high risk global equity with UK fund with 0.2% annual charge
25% in a medium-high risk global equity ex-UK fund with 0.2% annual charge
25% in a medium risk global "consensus" fund (mainly equities, but perhaps a fifth to quarter fixed income, plus some cash) with 0.2% annual charge
For the remaining 25% I'm considering allocating to 2 or 3 of the higher charge (but still less than 1%) funds. I'm toying with the idea of about 8-10% of my total allocation in a property based fund, and I wondered what opinions people had on such a move. e.g "don't - property is a rubbish idea", "maybe, but bear this in mind..." etc.
If relevant: I'm 50 years old, and I'm planning on staying in employment till at least 65 years (but who knows?), and I have about £190k in my pension already. My wife Mel is 44 years and probably has about £15k in a very old fund, that she has just started contributing into again.
I was considering one of either of these property funds:
FIDELITY L&G MANAGED PROPERTY FUND - CLASS 5 with charge 0.82%
This life fund invests in an underlying fund managed by Legal & General Assurance (Pensions
Management) Ltd. The objective of the underlying fund is:
The Fund aims to outperform the AREF/IPD UK Quarterly Property All Balanced Funds Index over
three and five year periods. The Fidelity fund invests in the underlying fund through a reinsurance
agreement with Legal & General Assurance (Pensions Management) Limited.
All Industrial 22.3%
Retail Warehouses 19.7%
Regional Offices 18.0%
Central London Offices16.4%
High Street Retail 8.4%
Leisure 6.0%
Shopping Centres 4.1%
Other 5.1%
or this one:
FIDELITY L&G 70:30 HYBRID PROPERTY FUND - CLASS 9 charge 0.67%
This fund invests in an underlying fund managed by Legal & General Assurance (Pensions
Management) Ltd. The objective of the fund is:
The fund aims to provide diversified exposure to the UK Property market and Global REITS market.
The Fidelity fund invests in the underlying fund through a reinsurance agreement with Legal &
General Assurance (Pensions Management) Limited
Managed Property 70.2%
Global REITS 29.8%
So in summary, the questions I want to ask are:
1. In general does 8-10% of a property fund in my plan sound like a sane idea?
2. If so does anyone like one of the above funds more than the other?
3. Can anyone explain what is meant by "Managed property" and "REITs" what are the important differences to note from a pension holder's perspective?
many thanks
Matt