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- SIPPs offer tax benefits and pay tax relief on your personal contributions.
- The deadline to use this tax year’s SIPP allowance is 5 April.
- 3 fund ideas that investors could consider for this year’s SIPP.
Kate Marshall, Lead Investment Analyst, Hargreaves Lansdown:
“A SIPP (Self-Invested Personal Pension) gives you the flexibility to invest where you want to. It offers a wider investment choice than other personal or stakeholder pension plans, giving you the potential for greater returns. Markets have been volatile in recent years, and this could remain for some time, but it’s important to remember that pension investment goals are usually long term in nature, meaning investors need to see through the short-term changes in value. SIPPs are a great way to save for the long term, especially with the added tax benefits, and here are three funds that are either focused on trying to grow your investment or provide a regular income over the long term.
Artemis Income
UK Equity Income funds are a convenient way to invest in a mix of dividend-paying UK companies. An income fund can be a great addition to a SIPP portfolio for different reasons. You can either take the pay-outs to supplement your income (if you’re old enough to access your pension) or, if you are targeting growth and aiming to build your portfolio for longer, reinvesting dividends can help grow your pot at a faster rate thanks to the effect of compounding.
The managers of this fund focus on UK companies they believe can pay a sustainable level of income, regardless of the economic backdrop. It’s a more conventional UK equity income fund, given the focus on companies with robust cashflows. It could form part of the foundation of an income portfolio, diversify a broader global portfolio, or diversify the income paid by bond funds or a global equity income fund.
Legal & General Future World ESG Developed Index
Global equity funds provide a good foundation to an investment portfolio focused on long-term growth. Investing in companies across the globe provides a good level of diversification in a single fund. This one provides broad exposure to a range of companies in developed markets, such as the US, Japan and Europe, while being mindful of environmental, social and governance (ESG) issues. Responsible investment funds give you the chance to make money in a way that’s in line with your principles.
This fund aims to track the performance of the Solactive L&G ESG Developed Markets Index. It won’t invest in tobacco companies, pure coal producers, makers of controversial weapons or persistent violators of the UN Global Compact Principles. It invests more in companies that score well on a variety of ESG criteria, such as the level of carbon emissions generated and number of women on the board. If companies score poorly on these measures the fund reduces exposure.
An index tracker fund is one of the simplest ways to invest, and this one could be a good addition to a broader investment portfolio aiming to deliver long-term growth in a responsible way.
Schroder Asian Alpha Plus
Over the years, rapid industrialisation, growing populations, and a desire to succeed have helped transform countries in the Asia region. Domestic consumption is set to be a key driver of growth over the coming years, helped by a young and growing population, and rising wealth. Continued innovation from companies at the forefront of technology based there could also provide exciting growth opportunities for investors.
Asia is home to developed markets such as Hong Kong and Singapore, while others, including China and India, are still emerging so a long investment horizon is essential to help ride out the volatility.
This fund is run by an experienced manager and team with an extensive track record of investing in Asia. The managers believe that Asian markets are a stock pickers paradise – since they tend to be less researched than developed markets there is plenty of opportunity to uncover hidden gems.”
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