Investing in funds is popular amongst thousands of investors because it's simple, low-cost and convenient.
In this article, we give our thoughts on the BlackRock Consensus 85 fund, how it works, and how it has performed recently.
Inside the BlackRock Consensus 85 fund
BlackRock is the name of the fund manager. They are a large and well respected investment company.
The fund aims to mirror the investment strategy of the average pension fund (or more specifically, the average fund in the ‘ABI Mixed Investment 40-85% Shares’ sector).
Whilst the name of the sector sounds complicated, it simply means the fund can invest anywhere between 40% and 85% of its value in the stock market – not just in UK shares, but across the globe too. This can include higher risk ‘emerging markets’ – like Brazil, Russia, India and China – and in the shares of smaller companies, often considered more risky than their larger counterparts.
To balance the amount of money invested in shares, the fund can also invest in bonds, property and cash, which are typically lower-risk investments. The proportions invested in each area will vary over time and may also include higher risk bonds.
Unlike most managed pension funds however, the Consensus 85 fund invests ‘passively’. This means BlackRock aims to track the performance of the markets they invest in (like the UK, US or Europe), rather than trying to beat them. Most pension funds are ‘actively’ managed. This means they are trying to beat the markets they are investing in.
This passive approach keeps the cost of investing down – meaning lower charges for your pension.
See the BlackRock Consensus 85 Factsheet (inc key features) »
Why is investing your pension in the stock market so important?
Over the long term (5 years +), shares have beaten other types of investment; cash, bonds and even – you may be surprised to hear – property.
Over time, companies create new products, find new customers, and become more efficient. This helps them grow profits which can lead to rising share prices. Hence, over long time periods, the stock market can deliver excellent returns.
But this doesn’t mean share prices go up in a straight line.
Share prices tend to zigzag – they go up and down more than other types of investment. This means they are considered higher risk so you could get back less than you invest.
Ultimately, investing your pension in the stock market gives it the best chance to grow over time – and, importantly, gives you the best chance of having enough money to live off in retirement.
Investing in bonds, cash and property helps to reduce the ups and downs of investing in shares – in other words, reducing the overall risk.
So that’s the theory. How does it work in practice?
The graph below compares each asset class by showing how much £1,000 invested in 1992 could be worth today. It also shows why it’s so important to consider shares as a long term investment.
Past performance is not a guide to future returns.
Source: Lipper IM to 01/09/16
How has the BlackRock Consensus 85 fund performed?
As the graph below shows, BlackRock Consensus 85 has increased by 52.98%* over 5 years.
It has consistently followed the performance of the average managed pension fund – which is the sole aim of the fund so it is doing its job well.
Past performance is not a guide to future returns.
*Source: Lipper IM to 01/09/16
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Sep 11 -
Sep 12 |
Sep 12 -
Sep 13 |
Sep 13 -
Sep 14 |
Sep 14 -
Sep 15 |
Sep 15 -
Sep 16 | |
| BlackRock Consensus 85 | 7.10% | 12.27% | 7.85% | 0.81% | 18.93% |
| IA Mixed Investment Sector 40-85% | 6.50% | 13.68% | 7.55% | 1.02% | 12.78% |
Fund ideas for your company pension
You don’t need to be an expert to make changes to your pension – whether that’s adding new money, choosing to move from one fund to another, or investing in more than just one fund. Choosing your own funds still means you have a fund manager carefully investing the money for you.
BlackRock Consensus 85 is designed to offer broad appeal - as mentioned, it's a 'passive' fund, which aims to track the market it invests in.
If you want to choose an 'actively managed' fund for your pension, Hargreaves Lansdown can help. Our Pension Research Team highlights three simple investment ideas to consider – one Adventurous, one Balanced and one Conservative.
We call them the ‘ABC Funds’.
Please note, the ABC Funds could be a useful starting point for investing your workplace pension but they are not personal advice. This fund review is provided for your information only and is not a personal recommendation to invest. When considering investment funds it’s important to bear in mind that their value can go down as well as up, and you could get back less than you invest. Any funds should be considered with a long term horizon. If you’re unsure of the suitability of an investment for your circumstances you should seek advice.
Questions?
Call our expert helpdesk on 0117 314 1795 or simply email invest@hl.co.uk. We’re always happy to help but remember, the helpdesk don’t provide personal advice. If you are at all unsure of the suitability of an investment for your circumstances, you should seek personal advice. Hargreaves Lansdown can provide advice for a fee.