The Lemon Fool

A relative is to join a Standard Life administered/managed pension scheme. Company contributions make this very desirable but they are only able to select from within the SL stable. There is the usual range of default/selected styles etc but also what appears to be access to the whole range of SL funds. Worryingly, they each carry a 'pension fund' appendage to the title but I suspect they are the underlying unitised investments, no doubt with an additional layer of fees for your trouble.

I do not invest directly in any SL funds other than SL UK Smaller Companies which I took as a bet in case Brexit might work out better than I anticipated.

My question is whether any LemonFools have favourites amongst the SL funds that I should look at as alternatives to plain vanilla options. Fees are a factor but I'm not inclined to suggest passive for a 30 year investment where a degree of risk is warranted. I'm looking for a portfolio Risk Rating indicator of around 4.5/7 - perhaps there is a use for these Key Document calculations...though I'm not yet convinced!

Peter1B1

I would suggest for someone with a 30 year time horizon passive is exactly where they should be

I’m not an expert on SL funds but workplace schemes tend to be very low costs with very low all in fees for the multimanager default ranges.

yuck!! no way would i be passive with a 30y horizon! I also read in a pension magazine that often those lifestyle funds put far too much in low risk assets in the early years.

As regards a value for the SRI or SRII score - surely that is if you trust the calculation itself?! VCTs (which have smaller/unquoted companies in their portfolio) are generally a risk rating of 3 because they are so thinly traded the share prices moves far less. That doesn't sound very good. Although i realise the calculations are currently different for the SRII

I have the Standard Life Small Co Investment Trust ....it has done well for me.

I also have had the Standard Life GARS fund, which I really thought was a waste of time, did not like it.

I do not like a single company lock in, how can one fund manager get it right across all opportunities and markets.

IMHO pick quality first, second and third, regardless of platform.

There's also the SL Global Smaller companies fund, which is run by the same team and has performed slightly better in the last few years.

I hold Standard Life Investments Property Income (SLI).
Pays a good dividend with half decent growth over 1, 5 and 10 year periods and still at a 1.7% discount to NAV.

https://www.theaic.co.uk/aic/find-compare-investment-companies?type=Filter&sort=10sptr&az=&country=&region=&objective=&sector=Property%20Direct%20-%20UK&manager=

midgesgalore

DavidM13 wrote:yuck!! no way would i be passive with a 30y horizon! I also read in a pension magazine that often those lifestyle funds put far too much in low risk assets in the early years.

"Passive" doesn't equal "lifestyle".
With SL you may be able to build a portfolio of passives that has no "low risk assets" if that is what you want.

torata

torata wrote:

DavidM13 wrote:yuck!! no way would i be passive with a 30y horizon! I also read in a pension magazine that often those lifestyle funds put far too much in low risk assets in the early years.

"Passive" doesn't equal "lifestyle".
With SL you may be able to build a portfolio of passives that has no "low risk assets" if that is what you want.

torata

But Passive equates to Pedestrian. All you can hope for is what the passive manager or algorithm provides. Aim a little higher

TJH

midgesgalore wrote:I hold Standard Life Investments Property Income (SLI).
Pays a good dividend with half decent growth over 1, 5 and 10 year periods and still at a 1.7% discount to NAV.

https://www.theaic.co.uk/aic/find-compare-investment-companies?type=Filter&sort=10sptr&az=&country=&region=&objective=&sector=Property%20Direct%20-%20UK&manager=

midgesgalore

Me too, and very happy with my decision.

tjh290633 wrote:

torata wrote:

DavidM13 wrote:yuck!! no way would i be passive with a 30y horizon! I also read in a pension magazine that often those lifestyle funds put far too much in low risk assets in the early years.

"Passive" doesn't equal "lifestyle".
With SL you may be able to build a portfolio of passives that has no "low risk assets" if that is what you want.

torata

But Passive equates to Pedestrian. All you can hope for is what the passive manager or algorithm provides. Aim a little higher

TJH

Hi torata,
yes sorry i realise that and was making a different point. i recognise it didnt read that way though.
In my view - lifestyle or passive are not for 30y time horizons

Trackers certainly ARE the investment of choice for a 30-year timescale. They will save you (roughly) 1% of your accumulated wealth each and every year due to their low charges which, over that time, will mean you keep a vast chunk of your own wealth instead of giving it to an investment "manager" who may well do worse than the index.

DavidM13 wrote:Hi torata,
yes sorry i realise that and was making a different point. i recognise it didnt read that way though.
In my view - lifestyle or passive are not for 30y time horizons

Hi David
Thanks for making that clear.

torata

Avantegarde wrote:Trackers certainly ARE the investment of choice for a 30-year timescale. They will save you (roughly) 1% of your accumulated wealth each and every year due to their low charges which, over that time, will mean you keep a vast chunk of your own wealth instead of giving it to an investment "manager" who may well do worse than the index.

Not according to any study i have ever looked at. And i am comparing it with price or NAV returns - both times net of all fees already. Clearly there are some companies that may lag the index or lag it net of costs, but the majority and weighted averages both are streets ahead. I am looking at World and All Share indexes here but i imagine it is mirrored elsewhere.

DavidM13 wrote:

Avantegarde wrote:Trackers certainly ARE the investment of choice for a 30-year timescale. They will save you (roughly) 1% of your accumulated wealth each and every year due to their low charges which, over that time, will mean you keep a vast chunk of your own wealth instead of giving it to an investment "manager" who may well do worse than the index.

Not according to any study i have ever looked at. And i am comparing it with price or NAV returns - both times net of all fees already. Clearly there are some companies that may lag the index or lag it net of costs, but the majority and weighted averages both are streets ahead. I am looking at World and All Share indexes here but i imagine it is mirrored elsewhere.

Well that puts the passive active debate to bed. I’ll hit sell on all my passives in the morning

Many thanks for all your comments. I have now waded through nearly 100 pages of SL compliance and guidance, no doubt heavily prescribed by regulators and concerns over possible future mis-selling allegations. Most of the fund titles are meaningless 'lifestyle' descriptives but there are instances where the underlying investment can be seen, including Vanguard trackers.

On the passive/active front, charges seem to me key. Anything 'active' will incur charges over 1% whereas passives are mostly half that. Over the long term, I'm inclined towards torata and the passives because anything else will so struggle to do better over the charges hurdle. Vanguard's global equity tracker plus a small number of others for concentration - away from UK at least for the near term - seem sensible.

Noted also comments re the SL Property Income fund. Thanks.

One of the surprises on reading through is the very low return (after inflation adjustment) projected for a lifetime's pension saving - based on projected 1% 'ish growth rates. Beyond 'free' employer contributions, one is tempted to ask 'why bother' and look for alternatives. Having said that, I fully appreciate the need for proper pension provision and can only hope that outruns turn out better than projections. Hope springs eternal...

Peter1B1 wrote:One of the surprises on reading through is the very low return (after inflation adjustment) projected for a lifetime's pension saving - based on projected 1% 'ish growth rates.

It's easy enough to get to 1%. Start with a 5% return, take off 1% for partly investing in bonds, another 1% for charges and 2% for inflation.

My other half had a company pension through Standard Life - as you have identified, they offer a good range of index trackers, including Vanguard trackers. Vanguard offer low costs, low tracking error, a company based on mutual principles (in the US anyway, where they started) - I consider them best of breed for low cost index tracking funds.
So I think you’ve got great choices. You don’t need to select a lifestyling product, you just need to select your risk level and choose your asset mix accordingly. I’d personally go for a simple 2 or 3 funds covering global markets. I myself would include 20% bonds but over 30 years there are arguments for 100% equities.
Keep it simple, set it up and forget about it.

Thanks for all the comments and reassuring. I didn't know where I would end up with this question but I'm pretty much in line with jabd21. Much appreciated.

Muddywaters wrote:

DavidM13 wrote:

Avantegarde wrote:Trackers certainly ARE the investment of choice for a 30-year timescale. They will save you (roughly) 1% of your accumulated wealth each and every year due to their low charges which, over that time, will mean you keep a vast chunk of your own wealth instead of giving it to an investment "manager" who may well do worse than the index.

Not according to any study i have ever looked at. And i am comparing it with price or NAV returns - both times net of all fees already. Clearly there are some companies that may lag the index or lag it net of costs, but the majority and weighted averages both are streets ahead. I am looking at World and All Share indexes here but i imagine it is mirrored elsewhere.

Well that puts the passive active debate to bed. I’ll hit sell on all my passives in the morning

OK, lets use some data to back this up. Pick any time period/s and any benchmark (and ETF) and I will run the numbers via Mstar. we can see relative performance and help put it to bed at least.

2000 - 2017

You can use a FTSE Allshare index charging 0.25%(annually) for cpmparison. Pound cost averaging. Say £500 per month for the duration.

I love the SL GARS fund though as it conned the financial sector completely. Our default pension scheme had some investments in this and it always looked like snake oil. I have always self-invested in an Allshare tracker.

I know some Financial Advice companies had their own pension funds 100% invested in this. Persuaded by their own mis-information. A classic case of being hoisted by your own petard!