Investment Choice - DC Pension

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MajorTom

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Hi

Just looking for some feedback on the best allocation for me on my company pension plan. I'm 35 and the company will contribute 13% if I contribute 5%.

Reading other threads on the forum, its mostly suggested to lean towards a high equity allocation and aim for low charges at my age. With that in mind, what would be the advice on the following choices I have ? I've included the category these are given under and a charge off the Fund Fact sheet. Some of these are "Fund charge" while others are "Management Charge". Ideally, I don't want to look at this too often and over-think it for a good few years.

Any feedback very welcome, thanks :

Category Fund Charge
Diversified Growth Irish Life Diversified Growth Fund N 0.55%
Emerging Markets Irish Life MSCI Emerging Markets Equity 0.30%
Active Balanced Schroders Int Selection - Global Diversified Growth 0.80%
Active Global Equity MFS Meridian - Global Equity Fund 1.05%
Passive Balanced Irish Life Pension Consensus Fund S5 0.30%
Passive Global Equity Irish Life Indexed Equity Partial Hedge 0.30%
 
High equity / low charge is indeed in my opinion the way to go.

So Passive Global Equity Irish Life Indexed Equity Partial Hedge 0.30% could be perhaps the most attractive.
Though a higher charge can be justified if the fund performs above market average. So theoretically it could make sense to go for example with Active Balanced Schroders Int Selection - Global Diversified if that fund seems to be more profitable.
In the end you have to take a look at each fund and do the maths.

Most likely you will have also the possibility to allocate to more than 1 fund in case you want to have a wider diversification.
 
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The Irish Life consensus fund is a reasonable default option IMO. It's highly diversified and moderately aggressive.

Incidentally, that's a very generous employer contribution.
 
Sarenco said:
The Irish Life consensus fund is a reasonable default option IMO. It's highly diversified and moderately aggressive.

Incidentally, that's a very generous employer contribution.
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Nothing wrong with it but it just mirrors the average asset and country allocation of other Irish fund mangers. So it can only be as diversified and aggressive as other funds are.

And Irish stocks represent over 6% of the fund value which is a lot considering the small Irish market.
 
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JoeRoberts said:
Nothing wrong with it but it just mirrors the average asset and country allocation of other Irish fund mangers. So it can only be as diversified and aggressive as other funds are.

And Irish stocks represent over 6% of the fund value which is a lot considering the small Irish market.
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Well, the fund gives an investor exposure to over 5,000 stocks, which I would regard as well diversified. It currently allocates 75% to growth assets (70% to equities and 5% to property) and that's pretty aggressive in my book.

I think the allocation to Irish equities is more like 4.5% of the overall fund value but I don't disagree with your comment that this degree of home bias doesn't seem justified.

To be honest, I don't particularly like the "consensus fund" approach but, given the options presented above, I think the OP could do a lot worse.
 
As I said its probably as good as any and cheap but just wanted to make clear to OP that it had "no mind of its own" so to speak.
He might be able to reduce the Irish exposure by splitting his investment with the Passive Global Equity - I can't find a factsheet for it though. It would increase his overall equity rating but he is young enough not to worry.
 
That's another perfectly good option (although I personally dislike currency hedged equity funds) and you could also make a reasonable case for adding a small allocation (5% or so) to the emerging market index fund.

The truth is that small allocation differences won't have a material impact in the early accumulation years.
 
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