Fund choice in managed funds for retired couple

Cantillon said:
(1) I still can't get over the performance of the Eurozone Property fund. I know capital values of commercial property have fallen, but what about 17 years of rental income???
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In my post #21 above, the decline in this fund was due to the collapse of the share price of a German property firm that is a key component of the index, and not exclusively to general property values. I also had a holding in this fund but as it showed no signs of improvement I switched out to a Eurozone equity fund last year.



Cantillon said:
We are in the process of instructing the broker to dispose of four of the funds:

Long Bond
Dividend Growth
Eurozone Equity
Eurozone Indexed Property
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Switching out of Long Bond makes sense, see post #21 above, but why are you switching out of Dividend Growth and retaining Active Fixed Income? Active Fixed Income has a performance of -9.63% over 5 years and 3.70% over 10; Dividend Growth has a performance of 50.63% over 5 years and 121.46% over 10. Fund Performance Calculator | Zurich Life. It’s not really prudent to cut your winners.

Personally, I’d stick with Eurozone Equity. You’ve 350k in deposits, presumably earning little, but Eurozone Equity has returned 49.97% over 5 years and 116.96% over 10. Fund Performance Calculator | Zurich Life . You could regard the deposits as a euro-denominated hedge against volatility in Eurozone Equity.
 
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Update

Retired couple, aged 80 + 87, in good health
Gross income from three pensions = 52k approx (Public service DB pension 40k + ARF income 4k + half State Pension 8k approx)

  • Zurich Matrix investment bond started May 2007
  • 100,000 initial with 101% allocation + refund of broker's 3.5% commission = 104,500 at the start
  • At the time the taxation of these funds was DIRT + 3% I think, so 23%
  • LAET applied at 8th and 16th anniversary in 2015 and 2023
  • The couple are aware of this asset, but would probably not have much of an idea of current values, and are not aware of LAET
  • The couple have deposits of 200k / 300k, I'm not sure of the exact figure

Eight funds chosen at start (in hindsight this doesn't make sense), 12.5% into each


Risk rating 2024AMC on 2024 statementAdditional AMCOther ongoing costsLaunch dateFund size 2024HoldingsDetails
Active Fixed Income41.000019.06.19951,29940actively managed by Zurich
Long Bond51.0000.0101.04.20037130actively managed by Zurich
Balanced, 50%-75%51.0000.0401.11.19892,796700actively managed by Zurich
Performance, 65% - 90%51.0000.0401.11.19892,164700actively managed by Zurich
Dynamic, 75% - 100%61.0000.0301.11.19892,835700actively managed by Zurich
Eurozone Equity61.0000.0401.04.2003116100actively managed by Zurich
Dividend Growth61.0000.0101.07.2005316170actively managed by Zurich
Indexed Eurozone Property61.280.40001.08.2007238invests in iShares ETF

  • The property fund did very badly
  • The two bond funds dropped sharply in value after 2021, as interest rates rose

Thanks to advice from this forum, and other considerations, fund switches were done as follows:

Late 2024: sell all holdings in four funds
transfer Long Bond (fund very small) to Active Fixed Income
transfer Eurozone Equity + Dividend Growth + Eurzone Property to Performance fund


Late 2025: sell all holdings in the Balanced and Dynamic fund, transfer to Performance fund

By now, 2026 statement, the total is €196k, with €164k (83.5%) in the Performance fund and €32k (16.5%) in the Active Fixed Income fund

Some points:
  • the AMC is 1%, that is €1,832 this year in fees, for what??
  • it is unlikely that these funds will be used before death, but that is not 100% certain
  • The ARF is worth about €70k, and is held in the same Zurich Performance fund
  • The two bond funds, now transferred into one, worth €26,125 in 2007, are worth €32,300 nineteen year later, under 24% growth


I welcome any comments on asset allocation. I feel that all is okay, and I should just leave things as they are. Although I am thinking about the Govt's proposed scheme, and I am also hoping that LAET is cut again.
 
Cantillon said:
I welcome any comments on asset allocation
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What is your goal with these investments?
Is your total gross income €52K?
Is your total savings/investments €196K?
I presume that you own your own home already?
Are there any other assets to speak of?
 
The retired couple in question have gross income of about 52k, and they own their own home, yes.
Their assets are as follows, approx.

House = 450k
Deposits = 300k I think, maybe 350k
ARF pension fund = 70k
The funds in question in this thread = 196k

They have no specific goal. I am just wondering am I missing anything on the asset allocation. I don't think so, I think I will leave things as they are.
 
Cantillon said:
Out of 600k financial assets, that would be:

Shares 195k = 32.5%
Bonds 42.5k = 7.1%
Cash = 350k + 12.5k = 362.5k = 60.4%
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It would be worth recalculating these values for the current setup.
But overall, it is a much better assest allocation. And assuming there is still >300K on deposit, is appropriately conservative.
 
Cantillon said:
Out of 600k financial assets, that would be:

Shares 195k = 32.5%
Bonds 42.5k = 7.1%
Cash = 350k + 12.5k = 362.5k = 60.4%
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I don't think that their PPR should be ignored in this analysis.
Cantillon said:
House = 450k
Deposits = 300k I think, maybe 350k
ARF pension fund = 70k
The funds in question in this thread = 196k
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That's just over €1M total net worth so any asset allocation percentages should be calculated on that total figure.

Key Post - Should your home be considered an investment diversification?

I question the idea that your home is an asset in an investment portfolio. Are your legs also an asset? Diversification means that if one asset falls maybe another will do well. Your home may rise in value but you still have to live in it. If you want to think of it as an asset then think of...
www.askaboutmoney.com
 
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