A Fool reports on the progress he's made since he took control of his pension.
Back in March, I related how I'd abandoned my poor-performing Equitable Life pension, and put the whole lot into a SIPP. The logic, as I explained, was simple.
By late November 2008, a window of opportunity had opened that was too good to miss, I judged. Having just 4% or so exposure to the stock market, Equitable's with-profits fund had been protected from the fall in the FTSE that had seen it slump from 6,716 in July 2007 to the level of 4,000 or so that it had reached when I made the decision.
But equally, it wouldn't benefit from the eventual upturn, when it came. I could leave the money in the Equitable -- or put it somewhere where it would grow in line with the FTSE's own recovery: an index tracker within a low-cost SIPP, in other words. Potentially, with re-invested dividends, my pension would double -- something that it certainly wasn't going to do if left with Equitable Life.
By early January, I had £65,400 in my newly-established Hargreaves Lansdown SIPP. Here's a progress report on how I got on.
Slowly, slowly
The first decision I made was a good one. I wasn't going to pile into the FTSE all at once. I invested £30,000 in a low-cost HSBC FTSE All-Share index tracker (with an annual charge of 0.27%) in mid-January, and left the rest to see where the FTSE might go next. The FTSE was then at 4,200.
A month later, deciding that the worst was past, I invested another £30,000 -- with the FTSE still at 4,200. £20,000 went into the same HSBC FTSE All-Share tracker, while £10,000 was placed into Legal & General's Pacific Index tracker, which invests in a basket of Asian shares. Asia would recover first, I had decided.
That decision wasn't quite so clever. First, the FTSE promptly dived downwards, eventually hitting a floor in early March of just over 3,500. Oh dear: I should have waited. Still, what's done was done. And second, Asia did recover first. It was soon clear that I should have put more into Asia, and less into the FTSE.
A little diversification
The FTSE eventually began to recover, and by late April I was once again above water on the FTSE, and well ahead on Asia. I'd still got £5,000 sitting as cash, though, and decided at the end of May to invest it in HSBC's FTSE-250 tracker.
In early June, I also made four other trades. First, I sold £10,000 of FTSE All-Share units, locking in a gain of 10%, and invested £2,500 in each of two investment funds I'd written about here and here on the Fool -- JP Morgan's Natural Resources fund, and the CF Junior Oils Trust, which invests solely in smaller oil and gas exploration and production companies. Both are among Hargreaves Lansdown's 'Wealth 150' selection of funds -- its 'top 150' among the 2,000 or so funds that it covers.
The remaining £5,000 went into buying more FTSE 250 units, the logic here being one that I'd also written about on the Fool: historically, in a bull market, the FTSE 250 comfortably outperforms the All-Share index. There's nothing magical about this -- it's down to investment guru Jim Slater's observation that "elephants don't gallop".
I've made no trades since then.
So how am I doing?
Clearly, I got some things wrong. It was a mistake to leave £5,000 out of the market for so long: I should have taken advantage of the FTSE's fall to 3,500. A better buying opportunity hasn't -- so far, anyway -- come along. And now, it's too late.
I don't regret the foray into natural resources and small oil exploration companies, either, although the timing meant that I'd missed a decent chunk of the recovery. On the other hand, the money invested in those two funds hadn't been sitting idle -- it had been riding the FTSE's recovery.
In percentage terms, my FTSE All-Share tracker units have increased in value by 19%, and my FTSE 250 units (purchased after the All-Share, don't forget) have gained 13%. The star performer has been the £10,000 invested in Asia, which has posted a gain of 39%.
The small amounts invested in miners and oilies have done less well, but have been held for just two months so far. JP Morgan's Natural Resources fund has risen 3%, while the CF Junior Oil Trust has climbed 5%.
The bottom line
Overall, as of this morning, my SIPP stands at £79,230 -- a healthy increase of some £13,830 over the few short months it has been in existence. In percentage terms, that's a rise of 21%, and as I don't plan on needing the money for another 15 years or so, the odds are good that I'll meet my target of doubling the fund.
In the meantime, I've other fish to fry. It's been niggling me for some months that a stakeholder pension worth some £25,000 is attracting charges of £14 or so -- every month -- and so I've just opened another SIPP on another low-cost platform.
My plan is to transfer in the stakeholder money, and invest it myself. This time, the idea is to hold a higher proportion as individual shares, avoiding altogether the (already low) charges I'm paying for the trackers and funds in the first SIPP.
In the months ahead, I'll write again about how I've got on.
More on retirement investing:
> Don't forget that The Motley Fool Share Dealing service also offers a SIPP.
