Consolidating gains / reducing risk in SIPP Rheumatoid

#1
My HL SIPP has made some good gains in the last couple of years and as I approach retirement I want to try and reduce volatility and risk and try to hang on to some of the gains. I currently hold mainly UK and global trackers and some managed funds that focus mainly on FTSE 100 and global stocks. I also hold some VLS 60. Other than holding cash at pathetic rates what else might I do? Any ideas welcome.



Thanks



R.

#2
You mention you hold mainly UK and global trackers but you also have VLS 60 which holds UK and global equity trackers and also bonds. If you switch out some of your equity trackers for more of something that is not 100% equity (like the VLS product) you will reduce risk. Obviously such a product can easily lose several tens of percent but unlikely to lose 50-60% that you could lose in a pure equities global tracker.



There are lots of other things that are not equities. Property being one. Infrastructure another. Both having a range of risk levels depending on the vehicle you pick and its portfolio. There are some investment trusts that aim primarily to preserve capital with growth as an important but secondary objective. There are 'absolute return' funds which aim for a more modest return in the good times and a still-positive return in the bad times. It is good to be diversified if you don't want to just ride the trackers up and down through the economic cycle.



You mention approaching retirement. For some people that means drawing down the entire contents of their SIPP over a couple of years as part of paying off a house or funding a period until other pensions kick in. For others, it just means taking an income from the SIPP while the capital has to last 40 years.



If you are one of the ones who might need the pension to last until you get a birthday card from the Queen, you don't need to massively reduce volatility at the expense of long term returns. If you are one of the ones who really needs the money urgently, you do need to massively reduce volatility and seek only modest gains.

#3
Thanks Bowlhead



I am in two minds about using the SIPP to fund the 2 years between retirement (at age 58 in 2.5 years time) and NPA 60 or just to leave it for a rainy day or for the kids / wife on my demise. I still can't get my head round how much better it will be to draw down the SIPP and take less of a tax hit and the benefit it would have in reducing the actuarial reduction on my pension. Something I still have to work out and make a decision on.



I have considered transferring some in to say VLS20 and will probably do that.



I like the sound of absolute return funds but having read around it seems they don't always do what they say on the tin and have often performed very badly.



I am not familiar with the 'capital preservation' trusts you mention and will look in to those.



Thanks again for your help.



R.

#4
Moving some money into a couple of good sterling corporate bond funds should reduce volatility. I think global bond funds are likely to more volatile over the next two to eight years due to brexit, so I'm buying sterling funds for safety.

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