Each and every year we review the funds of all customers whose pension and other funds are invested through us.

Much is written and said about investment fund performance, there are always conflicting views on where and how the best returns are made.

I was once at a meeting where an investment house introduced its various fund managers to discuss their portfolios and give their views on what would be possibly sound investments. One manager came on and made an excellent case for investing in Russia, giving examples of what they believed were Russian companies and stocks that offered good returns for relatively low risk.

No sooner had the applause died down for the speaker, when another well respected investment manager took the stage and within seconds had said “Well you wouldn’t want to be investing in Russia, would you ? !! They wern't joking - I remain confused to this day.

Many of the customers who use our income drawdown service come to us because they want a way of taking their 25% tax free lump sum without the need to buy an annuity or take some other form of retirement income. We always explain that taking the lump sum is the easy bit, it is managing the 75% that remains invested that is the hard part.

Each February we conduct our annual fund review, where we tell customers how their pension fund has performed over the previous year and give them a range of options on what they can do. As a non-advised service we use a range of passive funds to allow customers access to a fund that matches the personal level of risk they are prepared to take with regard to their own investment.

The customer can also choose their own funds.

With the passive fund approach, somebody who is very cautious and worried about investment can sleep peacefully at night knowing that they are never going to be in high-risk funds, while those customers who are prepared to speculate can equally be certain that their money is being managed in line with their wishes.

So how did we do in 2013 ?
Overall we are very pleased with the performance - however it is what the customer thinks that is the important bit, and no doubt they will tell us over the weeks ahead.
The important thing to say is that there are no big losses for any customer to report. While some customers may have seen a small reduction, many have had their fund more or less hold its value. These customers have all been in cautious / balanced funds where their primary concern has been not to lose what they have, rather than risk that safety for potentially higher returns. To that end we feel the funds have done their job.

There have been some excellent returns for customers during 2013. It has not been untypical for adventurous customers to see a return of around 7.5% for the year. Not bad (we think) given that the country is in the middle of a severe austerity programme and has had the Bank of England base rate locked at 0.5% for several years.

Here are just a few of our outstanding performers for 2013 :

A customer in a balanced managed fund, which was valued at just under £353,000 in March 2012 managed to take £22,915 out of the fund during the year and still see their fund grown to over £357,000 by January 2014.

A client with a standard Managed Fund and nothing else, achieved 7.66% growth during the year increasing their fund value from £75,847 to £81,661.

But our favourite is the customer who in 2005 invested £55,000 in an Income Bond. They have taken a regular income since then directly out of the bond. In total they have taken £22,616. On the date of our 2014 fund review (17th January 2014) the bond was still worth £51,494.

Of course none of the results above can be guaranteed and the value of your fund can go down as well as up. It also doesn’t mean that aggressive funds are better performers than more cautious funds. An aggressive fund looks to achieve higher than average returns than a cautious fund, however there is significantly greater risk that you could take big losses if the investments don’t perform as anticipated. This year we have been lucky that the aggressive funds have delivered a return.

Customers in more cautious funds shouldn’t really feel disappointed that they didn’t achieve the same growth. Their funds never set out to achieve it in the first place. Their aim was to achieve growth but not at the expense of risking the initial value of the fund. Generally all of our funds have performed much as expected – let’s hope it is the same story next year !!

We feel this demonstrates that we have a sound non-advised fund management process that matches clients to the correct level of exposure and that our funds perform in line with what would be expected from the rest of the market.

If you would like to know how we can help you manage your existing pension fund call us on 020 33 55 4827. We can also provide quotes for annuities, income drawdown or even get you guaranteed growth on your pension fund if protecting your capital is your main consideration.