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SIPP portfolio suggestions please

A helpful place to also put any annual reports etc, of your own portfolios
CautiousPaul
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SIPP portfolio suggestions please

#460877

Postby CautiousPaul » November 25th, 2021, 3:29 pm

I have a couple of decent DC pension pots from previous employments but neither offer a drawdown facility so I'm looking to migrate one of them to my fairly small SIPP. Let's say I have about 300k to move. As I have other safety nets, primarily savings that I have been living off for the past 3 years, I'm only thinking about investing my SIPP in UK equities. The plan is to drawdown one lump sum each year of say around 30K. I already receive the full state pension, live fairly simply and have no debt.

Below are the contents or potential contents of my SIPP:

Angle PLC - I already have these here and in ISAs so won't add any more here nor sell anytime soon
Aviva - these pay about 5% divi and look pretty safe
Direct Line - over 8% divi and look pretty safe
Lloyds Bank - I feel these are a reasonable inflation hedge
Primary Health Properties - I already have these. They have a good divi track record
Tesco - I have these too but not really looking to add anytime soon
Vodafone - decent divi and possible share price growth
Walker Crips Group - according to some shrewdies these are very undervalued

Not very diverse but so far so good. What improvements would people suggest ?

Many thanks in advance.

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Re: SIPP portfolio suggestions please

#460886

Postby Urbandreamer » November 25th, 2021, 4:00 pm

Have you thought about targeting some capital growth?

A small amount in FCIT, SMT or other growth IT.

I recognise that such things are not "cautious", but how long are you expecting to be in drawdown?

CautiousPaul
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Re: SIPP portfolio suggestions please

#460896

Postby CautiousPaul » November 25th, 2021, 4:23 pm

Urbandreamer wrote:Have you thought about targeting some capital growth?

A small amount in FCIT, SMT or other growth IT.

I recognise that such things are not "cautious", but how long are you expecting to be in drawdown?


I'd hope to be in drawdown for a minimum of 10 years but with some capital growth perhaps a fair bit longer. Just as well I asked as I don't know what FCIT and SMT stand for! Please elaborate and suggest funds(?) to consider.

Many thanks for your reply.

PS the dream scenario is my 2 kids inherit some of my pension pot(s) but not in the near future. ;)

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Re: SIPP portfolio suggestions please

#460899

Postby Dod101 » November 25th, 2021, 4:31 pm

I would second the idea of some capital growth and the two mentioned by Urbandreamer would suit well I think. (F & C Investment Trust and Finsbury Growth and Income IT) Many of the 'good' shares re quite high at the moment, such as Segro but it has been a great growth share as well as providing some income. Diageo?

For income a utility or two ought to be in the mix although SSE have just cut theirs dividend. As of today, I would buy BAT for income and Legal and General although I acknowledge that the yield is not that high. Despite the higher yield in Aviva, I would prefer L & G. How about infrastructure? 3i Infrastructure just ticks along and does not raise funds very often unlike some infrastructure companies.

Dod

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Re: SIPP portfolio suggestions please

#460908

Postby BullDog » November 25th, 2021, 4:57 pm

A ~10% drawdown rate cannot sustain what the OP plans to do. If I understand correctly, drawing 30k a year from a 300k pot is not going to leave anything for heirs and may not even last into very old age. We don't appear to know how old the OP is or when he/she plans to start drawing down. Hope that us useful.

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Re: SIPP portfolio suggestions please

#460915

Postby Dod101 » November 25th, 2021, 5:11 pm

BullDog wrote:A ~10% drawdown rate cannot sustain what the OP plans to do. If I understand correctly, drawing 30k a year from a 300k pot is not going to leave anything for heirs and may not even last into very old age. We don't appear to know how old the OP is or when he/she plans to start drawing down. Hope that us useful.


Well he tells us that he draws the State pension so he is 65/70 at least. He tells us from his second post that he hopes to drawdown for 10 years maybe a bit longer so it will be a fairly fast diminishing pot. A modest number of growth shares will do no harm in that scenario I would have thought.

Dod

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Re: SIPP portfolio suggestions please

#460935

Postby Urbandreamer » November 25th, 2021, 6:31 pm

CautiousPaul wrote:Just as well I asked as I don't know what FCIT and SMT stand for! Please elaborate and suggest funds(?) to consider.


Dod has been very tolerant. He gets, rightly, incensed when people like me use codes without the full name.
FCIT, as said, the old F & C. A big old Investment trust that has moved with the times.
SMT, Scottish Mortgage Investment trust. There was a time when this was more like F & C, but arguably it started out risky and is today. It was heavily into Tesla a couple of years ago, but currently Moderna is a big holding. Fantastic growth over the last five years, but it holds significant private equity and should be expected to be volatile.

I don't invest in "Funds" myself, so I'll leave that to others.

However if you want another high risk/ high reward suggestion then Pacific Horizons (PHI).
Invests in companies around the Pacific, currently about 1/4 in India.

Another to keep your eye on is (ROOF) or Atrato Onsite Energy. The have, or just are doing, an IPO. They intend to buy roof space from warehouses and sell electricity.

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Re: SIPP portfolio suggestions please

#461107

Postby CautiousPaul » November 26th, 2021, 11:27 am

BullDog wrote:A ~10% drawdown rate cannot sustain what the OP plans to do. If I understand correctly, drawing 30k a year from a 300k pot is not going to leave anything for heirs and may not even last into very old age. We don't appear to know how old the OP is or when he/she plans to start drawing down. Hope that us useful.


I'm 66 and don't intend drawing down 30k until the end of the next tax year, spring 2023. My intention is to live off of the 300k for at least 10 years and then move on to the next pension pot, which is slightly larger, That plan should take me into my early 90s when I would move on to my life savings. Obviously, I've assumed my pension pots can keep up with inflation over the coming years.

I will investigate growth funds and the shares mentioned in the replies but I'm fairly well covered in that area already with my share ISAs.

Thanks everyone for the suggestions so far.

PS good to see 3 of the shares (DLG, PHP and WCW) I listed in my first post have been fairly robust this morning given today's adverse market conditions.

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Re: SIPP portfolio suggestions please

#461110

Postby BullDog » November 26th, 2021, 11:33 am

CautiousPaul wrote:
BullDog wrote:A ~10% drawdown rate cannot sustain what the OP plans to do. If I understand correctly, drawing 30k a year from a 300k pot is not going to leave anything for heirs and may not even last into very old age. We don't appear to know how old the OP is or when he/she plans to start drawing down. Hope that us useful.


I'm 66 and don't intend drawing down 30k until the end of the next tax year, spring 2023. My intention is to live off of the 300k for at least 10 years and then move on to the next pension pot, which is slightly larger, That plan should take me into my early 90s when I would move on to my life savings. Obviously, I've assumed my pension pots can keep up with inflation over the coming years.

I will investigate growth funds and the shares mentioned in the replies but I'm fairly well covered in that area already with my share ISAs.

Thanks everyone for the suggestions so far.

PS good to see 3 of the shares (DLG, PHP and WCW) I listed in my first post have been fairly robust this morning given today's adverse market conditions.

Good luck, I thought 10% drawdown was a bit ambitious. Sounds like you have a decent plan which is extremely important to have.

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Re: SIPP portfolio suggestions please

#462365

Postby CautiousPaul » December 1st, 2021, 4:15 pm

For those of you with Sipps, what is your average annual yield expectation after inflation ? i.e. if you started with 100k, would you be expecting to see that grow by about 3% each year assuming no drawdowns but on top of inflation?
Clearly, a very hypothetical question but I'm curious to know what others expectations are. As things stand, I'd be happy just to keep up with inflation.

As ever, thanks in advance for any replies.

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Re: SIPP portfolio suggestions please

#462395

Postby kempiejon » December 1st, 2021, 5:54 pm

CautiousPaul wrote:For those of you with Sipps, what is your average annual yield expectation after inflation ? i.e. if you started with 100k, would you be expecting to see that grow by about 3% each year assuming no drawdowns but on top of inflation?
Clearly, a very hypothetical question but I'm curious to know what others expectations are. As things stand, I'd be happy just to keep up with inflation.

As ever, thanks in advance for any replies.


I expect - is that hope - my investments to better inflation over the longer term, with a couple of decades under my belt my history stands up to that. Making a prediction about what that might for the next decades is more difficult not knowing where inflation is headed (though up looks on the cards in the near term) nor having certainty as to what my returns might be.

Over the longer term I think about 10% is quoted. IG say that between 1984 and 2019 the UK FTSE100 returned 7.75% annualised https://www.ig.com/uk/trading-strategie ... 00--200529.
Over 100 years the S&P500 has done a little better
According to historical records, the average annual return since its inception in 1926 through 2018 is approximately 10%–11%.[cite] The average annual return since adopting 500 stocks into the index in 1957 through 2018 is roughly 8%.

https://www.investopedia.com/ask/answer ... sp-500.asp

I'm not making any predictions but history being the only reliable source available looks like a few percent above inflation is possible.

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Re: SIPP portfolio suggestions please

#462414

Postby Urbandreamer » December 1st, 2021, 6:51 pm

CautiousPaul wrote:For those of you with Sipps, what is your average annual yield expectation after inflation ? i.e. if you started with 100k, would you be expecting to see that grow by about 3% each year assuming no drawdowns but on top of inflation?


I've been managing about 8%, ignoring inflation. So realistically 3-4% after. That isn't yield though, but total return. The yield is closer to 3%.

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Re: SIPP portfolio suggestions please

#462574

Postby tjh290633 » December 2nd, 2021, 11:05 am

CautiousPaul wrote:For those of you with Sipps, what is your average annual yield expectation after inflation ? i.e. if you started with 100k, would you be expecting to see that grow by about 3% each year assuming no drawdowns but on top of inflation?
Clearly, a very hypothetical question but I'm curious to know what others expectations are. As things stand, I'd be happy just to keep up with inflation.

As ever, thanks in advance for any replies.

I do not have a SIPP, but I have run my existing portfolio since 1987, when PEPs began. This is a table showing it as both Income and Accumulation units, with the rebased FT30 and FTSE100 indices and the RPI as comparisons.

.            Income Units              Accumulation   Rebased   Rebased   April   Rebased
Year to Unit Value Div/Unit Unit Value FT30 FT100 RPI RPI
21-Apr-87 1.00 0.00 1.00 1.00 1.00 1.018 1.00
05-Apr-88 0.91 2.86 0.94 0.92 0.91 1.058 1.04
05-Apr-89 1.18 2.72 1.28 1.10 1.05 1.143 1.12
05-Apr-90 1.21 4.24 1.40 1.13 1.14 1.251 1.23
05-Apr-91 1.34 5.42 1.69 1.28 1.26 1.331 1.31
05-Apr-92 1.30 7.52 1.75 1.24 1.26 1.388 1.36
05-Apr-93 1.51 6.91 2.13 1.44 1.46 1.406 1.38
05-Apr-94 1.70 6.27 2.50 1.65 1.65 1.442 1.42
05-Apr-95 1.66 7.48 2.55 1.57 1.62 1.490 1.46
05-Apr-96 1.95 7.38 3.13 1.80 1.90 1.526 1.50
05-Apr-97 2.16 8.40 3.62 1.85 2.21 1.563 1.54
05-Apr-98 3.31 10.00 5.72 2.45 3.05 1.626 1.60
05-Apr-99 3.44 8.46 6.12 2.47 3.21 1.652 1.62
05-Apr-00 3.32 11.33 6.13 2.42 3.35 1.701 1.67
05-Apr-01 3.29 12.42 6.32 2.05 2.89 1.731 1.70
05-Apr-02 3.37 13.02 6.76 1.65 2.69 1.757 1.73
05-Apr-03 2.29 12.10 4.85 0.85 1.85 1.812 1.78
05-Apr-04 2.92 13.38 6.56 1.22 2.25 1.857 1.82
05-Apr-05 3.46 13.06 8.10 1.33 2.51 1.916 1.88
05-Apr-06 4.30 17.42 10.57 1.68 3.06 1.965 1.93
05-Apr-07 4.91 19.42 12.63 1.90 3.31 2.054 2.02
05-Apr-08 4.14 24.32 11.21 1.58 2.93 2.140 2.10
05-Apr-09 2.28 21.17 6.46 0.87 2.01 2.115 2.08
05-Apr-10 3.69 11.06 10.86 1.33 2.91 2.228 2.19
05-Apr-11 4.16 16.71 12.76 1.43 3.03 2.344 2.30
05-Apr-12 4.40 17.73 14.19 1.33 2.96 2.408 2.37
05-Apr-13 5.27 21.83 17.01 1.54 3.29 2.476 2.43
05-Apr-14 5.34 23.05 18.88 1.75 3.38 2.557 2.51
05-Apr-15 5.91 24.98 21.84 1.91 3.47 2.580 2.53
05-Apr-16 5.92 22.67 21.72 1.79 3.17 2.614 2.57
05-Apr-17 6.62 26.21 25.47 2.10 3.76 2.706 2.66
05-Apr-18 6.12 33.19 24.66 1.79 3.62 2.797 2.75
05-Apr-19 6.35 31.25 27.04 1.95 3.82 2.856 2.81
05-Apr-20 4.60 31.57 26.64 1.44 2.77 2.926 2.87
05-Apr-21 5.99 22.80 29.07 1.76 3.46 2.960 2.89
02-Dec-21 6.32 29.70 30.95 1.74 3.62 3.120 3.06

Starting date obviously matters, and the income unit dividend is in GBp/unit, the unit value being in GBP.

I followed largely what became known as the HYP principle, so my portfolio tends to use dividend paying shares with yields above that of the FTSE100 when first purchased.

This table shows the IRR since a range of year end dates since 1996, which shows the effect of starting date:

Since        Acc Unit   IRR   
26-Dec-96 3.39 9.27%
01-Jan-98 4.86 8.04%
31-Dec-98 5.89 7.50%
30-Dec-99 6.85 7.12%
31-Dec-00 6.68 7.60%
31-Dec-01 6.43 8.20%
31-Dec-02 5.23 9.84%
31-Dec-03 6.38 9.20%
31-Dec-04 7.59 8.65%
30-Dec-05 9.69 7.56%
31-Dec-06 12.25 6.40%
31-Dec-07 12.41 6.78%
31-Dec-08 7.41 11.69%
31-Dec-09 10.24 9.72%
31-Dec-10 12.32 8.80%
31-Dec-11 13.45 8.75%
31-Dec-12 15.80 7.83%
31-Dec-13 19.56 5.96%
31-Dec-14 20.34 6.25%
31-Dec-15 21.42 6.40%
31-Dec-16 24.37 4.97%
29-Dec-17 26.70 3.83%
31-Dec-18 24.06 8.99%
31-Dec-19 28.84 3.74%
31-Dec-20 27.01 15.94%
02-Dec-21 30.95

The end of 2008 was onbiously a good starting point. 2016, 2017 and 2019 less so.

Hope that is food for thought.

TJH

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Re: SIPP portfolio suggestions please

#462801

Postby ADrunkenMarcus » December 3rd, 2021, 8:36 am

CautiousPaul wrote:For those of you with Sipps, what is your average annual yield expectation after inflation ? i.e. if you started with 100k, would you be expecting to see that grow by about 3% each year assuming no drawdowns but on top of inflation?


When I computed the figures a week or two back, my SIPP had delivered a nominal total return of 12% (CAGR) since 5 April 2014 against 11.4% (CAGR) of the FTSE All World TR index ($). That translates to double digit growth above inflation but I am not going to count on that!

I read somewhere - I forget the source - that a 5% annual real total return is a reasonable estimate for global equities over the long term.

Best wishes


Mark.

Dod101
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Re: SIPP portfolio suggestions please

#462802

Postby Dod101 » December 3rd, 2021, 8:57 am

CautiousPaul wrote:For those of you with Sipps, what is your average annual yield expectation after inflation ? i.e. if you started with 100k, would you be expecting to see that grow by about 3% each year assuming no drawdowns but on top of inflation?
Clearly, a very hypothetical question but I'm curious to know what others expectations are. As things stand, I'd be happy just to keep up with inflation.

As ever, thanks in advance for any replies.


The returns from a SIPP should be no different from any other form of tax free investment. Over the long term it should comfortably beat inflation provided it is invested in equities.

Dod

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Re: SIPP portfolio suggestions please

#463038

Postby SKYSHIP » December 4th, 2021, 11:20 am

Cautious Paul

An impossible question to ask of a community knowledgeable of the stock-market.

I suggest we must all outperform the indices; otherwise why are we here; we would long ago have put our portfolio in the hands of others, paid our fees and accepted the consequences.

My recommendation is read and learn so that you too can outperform. In particular look out for a small coterie of investment or unit trust managers who continuously outperform - start with Mark Slater perhaps. Place 50% in those funds and invest the other 50% yourself.

Do target stocks or sectors where you have some personal knowledge or empathy.

Personally I took control of my Pension Fund from the Pru back in 2002. Placed into a SIPP with YouInvest (AJ Bell). Retired and managed my SIPP on quite an active basis. It has compounded at 15%pa. I drawdown an average of 7.5%pa.

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Re: SIPP portfolio suggestions please

#463053

Postby SKYSHIP » December 4th, 2021, 12:19 pm

Incidentally, looking back at your very first post which mentioned a small stock selection; I would suggest you consider a Private Equity trust (they outperform conventional ITs) and a REIT (Real Estate Investment Trust).

The two I would recommend are:

# NBPE @ c1775 - 20% discount and c3.3% yield.

# SREI @ c51p - 22% discount & 5.7% yield. (NB: SREI is a generalist fund, so not committed to any one sector)

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Re: SIPP portfolio suggestions please

#463088

Postby TUK020 » December 4th, 2021, 2:29 pm

CautiousPaul wrote:I have a couple of decent DC pension pots from previous employments but neither offer a drawdown facility so I'm looking to migrate one of them to my fairly small SIPP. Let's say I have about 300k to move. As I have other safety nets, primarily savings that I have been living off for the past 3 years, I'm only thinking about investing my SIPP in UK equities. The plan is to drawdown one lump sum each year of say around 30K. I already receive the full state pension, live fairly simply and have no debt.

Below are the contents or potential contents of my SIPP:

Angle PLC - I already have these here and in ISAs so won't add any more here nor sell anytime soon
Aviva - these pay about 5% divi and look pretty safe
Direct Line - over 8% divi and look pretty safe
Lloyds Bank - I feel these are a reasonable inflation hedge
Primary Health Properties - I already have these. They have a good divi track record
Tesco - I have these too but not really looking to add anytime soon
Vodafone - decent divi and possible share price growth
Walker Crips Group - according to some shrewdies these are very undervalued

Not very diverse but so far so good. What improvements would people suggest ?

Many thanks in advance.

A good starting point would be to read the Monevator site on Passive investing, and then think hard about what 'edge' you might have over the other 3 million active investing entities on the London stock market.
https://monevator.com/category/investin ... investing/

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Re: SIPP portfolio suggestions please

#463589

Postby Hariseldon58 » December 6th, 2021, 6:13 pm

CautiousPaul wrote:For those of you with Sipps, what is your average annual yield expectation after inflation ? i.e. if you started with 100k, would you be expecting to see that grow by about 3% each year assuming no drawdowns but on top of inflation?
Clearly, a very hypothetical question but I'm curious to know what others expectations are. As things stand, I'd be happy just to keep up with inflation.

As ever, thanks in advance for any replies.


Having been drawdown for a number of years I would not assume any regular growth after inflation per year, returns are very volatile , year by year.

My initial experience was not encouraging ie -50% cumulative after the first 16 months , ouch. There was a recovery and over the last 10 years the return after drawdown of around 3% for living costs and inflation has been underlying growth of around 7 ½ %.

When I looked at the initial portfolio of individual UK shares for a drawdown pot over 10 years my eyebrows lifted …

I don’t think it sensible to regard one portfolio in isolation of other sources of funds.

The primary object of the exercise is to live comfortably with a reliable income flow, everything else is secondary.

You manage cash flow year by year, your equity portfolio value will dance around significantly on a year by year basis, overall I have had a good 12% plus return pa over the last 30 years, looking at periods of 10 years or so but on shorter periods -50%.

Thus have enough cash/bonds whatever to cover the shorter periods and an equity based portfolio for the bulk, good years live off equities/top up cash/ bonds, bad years spend down cash/bonds.

It’s the overview of the portfolio that matters. I struggle to see the logic of a 100% equity portfolio for a 10 year drawdown to zero and then have another portfolio for the next decade. A bit of equity volatility could terminate the first portfolio well before the intended 10 year life.

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Re: SIPP portfolio suggestions please

#463962

Postby CautiousPaul » December 7th, 2021, 7:23 pm

Hariseldon58 wrote:
CautiousPaul wrote:For those of you with Sipps, what is your average annual yield expectation after inflation ? i.e. if you started with 100k, would you be expecting to see that grow by about 3% each year assuming no drawdowns but on top of inflation?
Clearly, a very hypothetical question but I'm curious to know what others expectations are. As things stand, I'd be happy just to keep up with inflation.

As ever, thanks in advance for any replies.


Having been drawdown for a number of years I would not assume any regular growth after inflation per year, returns are very volatile , year by year.

My initial experience was not encouraging ie -50% cumulative after the first 16 months , ouch. There was a recovery and over the last 10 years the return after drawdown of around 3% for living costs and inflation has been underlying growth of around 7 ½ %.

When I looked at the initial portfolio of individual UK shares for a drawdown pot over 10 years my eyebrows lifted …

I don’t think it sensible to regard one portfolio in isolation of other sources of funds.

The primary object of the exercise is to live comfortably with a reliable income flow, everything else is secondary.

You manage cash flow year by year, your equity portfolio value will dance around significantly on a year by year basis, overall I have had a good 12% plus return pa over the last 30 years, looking at periods of 10 years or so but on shorter periods -50%.

Thus have enough cash/bonds whatever to cover the shorter periods and an equity based portfolio for the bulk, good years live off equities/top up cash/ bonds, bad years spend down cash/bonds.

It’s the overview of the portfolio that matters. I struggle to see the logic of a 100% equity portfolio for a 10 year drawdown to zero and then have another portfolio for the next decade. A bit of equity volatility could terminate the first portfolio well before the intended 10 year life.


Thanks for the useful feedback. I'm fortunate in that I can be very flexible and won't solely need to rely on this portfolio for income. The only way it won't last 10 years is if every stock I buy becomes worthless. I will drawdown approx 10% each year regardless of the size of the pot. In theory, after 10 years it should still have some value.

Ultimately, I have two pension pots that don't allow drawdown and the annuity route seems ridiculously poor value so the drawdown SIPP option seems the most feasible assuming one is happy to manage one's own pension.


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