Here's how SIPP owners are investing their money right now

by Jemma Jackson from interactive investor |

interactive investor looks at how its customers, on average, save in their SIPPs, including the top equities, funds and trusts.

Interestingly, whilst passive investing and SIPPs might not at first glance go hand in hand – SIPPs are aimed at engaged investors, after all – three out of five of the most-held funds in interactive investor SIPPs are passives, via the Vanguard LifeStrategy range (see table on page two).

SIPP customers have 50% less exposure to direct equities than ISA customers, and are more inclined to favour funds, perhaps preferring to entrust the stock selection for the main bulk of their retirement with a professional fund manager. 

Nevertheless, the average interactive investor SIPP still holds almost a quarter of assets in individual stocks and shares. Whilst the top five funds all have a global theme, the most held investment trusts have a ‘home bias’, with three out of five in the UK sector.

Interactive investor asset breakdown as at 28 February 2019

  ISA SIPP
Equity 47% 23%
Open-ended fund 23% 36%
Investment trust 12% 12%
Exchange-traded fund (ETF) 5% 8%
Cash 13% 21%

Source: interactive investor

Moira O'Neill, Head of Personal Finance, interactive investor says: "Our SIPP customers fully embrace the wide range of investment opportunities available to them. While there is a significant amount invested in open-ended funds, in line with where most personal pensions are invested, our SIPP investors are also choosing to invest in directly held equities as well as investment trusts and exchange-traded funds (ETFs). Having a much wider range of investment options is one of the key benefits of SIPPs."

Cash in the SIPP

Rebecca O'Keeffe, Head of Investment, interactive investor adds: "High levels of cash in a SIPP are typically a result of the mix of investors, some of whom are approaching drawdown or taking tax-free cash, while others are looking for investment opportunities. When markets are volatile, if you are taking money from your investments it is important to have some sort of buffer zone, so that you are not having to sell investments in a downturn. That said, cash should usually be a short-term strategy, especially in the current ultra-low yield environment."

Most-held SIPP investments

The usual favourites top the tables of most-held equities, funds and investment trusts, but there are also some more interesting holdings by our SIPP investors. 

Rebecca O'Keeffe, Head of Investment, interactive investor, says: "While many of the usual suspects are on the list, what stands out is the fact that three of the top five open-ended funds are passive funds in the form of Vanguard's LifeStrategy range. This demonstrates that our SIPP investors have one eye firmly on their costs, with the other on the level of risk they are taking. 

"While most investors choose not to take an annuity, funds such as Vanguard's LifeStrategy range allow investors to ratchet down their level of risk as they approach and enter retirement and begin to treat their pot of lifetime savings as an income stream."

Moira O'Neill, Head of Personal Finance, interactive investor adds: "Previously, investors who were approaching their retirement would reduce their exposure to equities in the years running up to their fixed retirement date. Now, investors have far more flexibility as the UK pension freedoms allow you to choose when and how you access your retirement funds. This means that investors can work out when they want to access their funds and how much risk they want to take at each stage, both before and during their retirement."

Interactive investor SIPP top holdings

  Equity Open ended fund Investment trust
1 Lloyds Fundsmith Equity Scottish Mortgage
2 Royal Dutch Shell Vanguard LifeStrategy 80% Equity Finsbury Growth & Income
3 Amazon Vanguard LifeStrategy 60% Equity Woodford Patient Capital
4 BP Lindsell Train Global Equity Baillie Gifford Shin Nippon
5 GlaxoSmithKline Vanguard LifeStrategy 100% Equity City of London

As at 28 February 2019 – by value

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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