Is my strategy too cautious?

[Grueler]

I bought a Zurich ARF in Sept 2021 with a premium of €305K and in the first 2.5 yrs. the fund value has dropped by €50K. The investment split is Multi asset funds 68.5%, Equity funds 5.97%
and Bonds 25.47%. The fund charges are 1.25% and withdrawl is at 4%. If this pattern continues the fund will not last very long, My question is should I be more adventurous and maybe drop the bonds altogether?

 

[jpd]

Without more details about your overall financial situation, it is impossible to answer your query

It is equivalent to asking "Is this piece of string too long?"

 

[Bronte]

I bought a Zurich ARF in Sept 2021 with a premium of €305K and in the first 2.5 yrs. the fund value has dropped by €50K. The investment split is Multi asset funds 68.5%, Equity funds 5.97%
and Bonds 25.47%. The fund charges are 1.25% and withdrawl is at 4%. If this pattern continues the fund will not last very long, My question is should I be more adventurous and maybe drop the bonds altogether?

If you're the type of person watch's share prices dropping and it's worrying you, than you should not have invested in them.

Is it true to say this investment costs you 4.5K per annum. And it would cost you 12K to get out of it.

How much did it cost you to set it up?

With your low appetite for risk, (shares dropping) I don't think you should risk anything more 'adventurous' which sounds perilous close to 'gambling'.

Was your appetite for risk examined before you invested? Did you understand the risks involved?

 

[joe sod]

What are the multi asset funds, what are the name of these funds, i think these also must have a high allocation of bonds aswell?

 

[Dave Vanian]

Bonds and equities fell in value during 2022 but recovered since. So you should have seen a recovery since 2022. If the annual charge is 1.25% then it's likely that your broker is getting paid an ongoing commission. What does your broker advise regarding your fund choice? She should have full details of your financial circumstances and should have measured your attitude towards and appetite for investment risk and volatility.

 

[joe sod]

Bonds and equities fell in value during 2022 but recovered since.

Equities yes have recovered strongly as companies have pricing power during inflation whereas bonds havn't but the worst is probably over for bonds as inflation has eased back but is by no means dead yet

 

[GSheehy]

At a guess, I would say that the Multi Asset Funds you're in, over that period, are up (before AMC) single digit percentages, equity fund up double digit and bond fund/s down double digit.

If you're looking at the value online I'd aslo say that there's a (circa) 2% early exit charge built into the figure.

It is an odd mix of funds but I presume that you went through a fact find and risk profiler like this and you were circa 3 or 4?

Your investment strategy is based on your risk profile. If you were a 3/4 in 2021, you're probably still a 3/4 today.



Gerard

www.prsa.ie

 

[Grueler]

At a guess, I would say that the Multi Asset Funds you're in, over that period, are up (before AMC) single digit percentages, equity fund up double digit and bond fund/s down double digit.

If you're looking at the value online I'd aslo say that there's a (circa) 2% early exit charge built into the figure.

It is an odd mix of funds but I presume that you went through a fact find and risk profiler like this and you were circa 3 or 4?

Your investment strategy is based on your risk profile. If you were a 3/4 in 2021, you're probably still a 3/4 today.



Gerard

www.prsa.ie

This analysis is fairly accurate, I did this through a broker and yes we did a risk profile. I came out as a 3/4 and was quite happy with that.
I initially wanted to go the annuity route but the broker convinced me an ARF would be a much better option as the fund would not die with me and could be passed on to my kids at death. I understand that share prices fluctuate and dont stress about that. Annual charge is about 3.5K
and early exit 7.5K. The multi-asset funds are Prizm low, 1,2 etc. My thoughts are when I look at the fund performance charts equities have recovered well but bonds still down and have been for a long time, I think if I was invested more in the lower risk Prizm 2 and 3 and less in bonds the fund value would be more sustainable. As regards my overall financial position my kids have moved out so just the two of us now, we own our own house, no debt and full state pensions with partial UK state pensions so comfortable.

 

[redstar]

You say you are in Bonds 25.47%
If you were also in Prism Low and Prism 2, these are heavily invested in Bonds too.
Prism Low - 84% Bonds
Prism 2 - 73% Bonds
Even Prism 3 is 59% Bonds

With a decline in Bond values recently, then any Bond-heavy investments would take a hit.

Prisma Funds / AAA Funds| Zurich Life Funds

Prisma funds aim to generate long-term capital growth by targeting specific levels of volatility with returns appropriate to individual investor risk profiles.

www.zurich.ie

 

[Fortune]

This analysis is fairly accurate, I did this through a broker and yes we did a risk profile. I came out as a 3/4 and was quite happy with that.
I initially wanted to go the annuity route but the broker convinced me an ARF would be a much better option as the fund would not die with me and could be passed on to my kids at death. I understand that share prices fluctuate and dont stress about that. Annual charge is about 3.5K
and early exit 7.5K. The multi-asset funds are Prizm low, 1,2 etc. My thoughts are when I look at the fund performance charts equities have recovered well but bonds still down and have been for a long time, I think if I was invested more in the lower risk Prizm 2 and 3 and less in bonds the fund value would be more sustainable. As regards my overall financial position my kids have moved out so just the two of us now, we own our own house, no debt and full state pensions with partial UK state pensions so comfortable.

I've never understood advisors who mix and match with multi asset funds. The whole point of them is avod any messing around. Risk profile says 2 out of 5, then go for prism 2 or whatever. By adding on bonds and equities, they're messing with the asset split and also negating most of the benefits of automatic rebalancing in the multi asset fund.