This is what AJ Bell’s investors are holding in their SIPPs

Self-invested personal pensions (SIPPs) allow plenty of choice when it comes to investment options. This is a perk that many AJ Bell customers have taken advantage of, putting their savings into a variety of stocks, funds, investment trusts and ETFs instead of the cookie cutter pension investment options.

However, choosing investments for your SIPP can also be a daunting process at times, since you are likely relying on the returns to fund your retirement. Although SIPPs let you invest in a broad range of investment options, some people find different risk levels suit different periods of their lives.

Below, we highlight the most popular stocks and funds (including traditional funds, investment trusts, and ETFs) held by AJ Bell customers, as well as their average returns over the past five years. However, remember that past returns don’t guarantee future performance.

We’ve split the groups into SIPP investors that are up to the age of 66 (the current state pension age) and over 66, where more investors are likely to be in retirement.

So, what are investors holding in their SIPPs, and which investments are popular with customers of all ages? 

The top funds, trusts, and ETFs among customers up to age 66

Source: FE Fundinfo total return

When it comes to funds, AJ Bell’s younger cohort of SIPP customers have chosen a mix of options including global trackers, US trackers, technology-focussed investments and even some physical gold. The most popular option was AJ Bell’s range of multi asset funds. These can be useful for customers who would like their portfolio to be diversified, as the managers choose a range of equity, fixed income, and cash investments. Because the funds are a mix of different types of assets, they will usually have a lower risk level and a lower return than a pure equity fund.

Scottish Mortgage is another popular choice, an investment trusts that hand-picks its investments instead of following a broader index (like the FTSE 100). Although the past five years have yielded an average 5% return, Scottish Mortgage has returned an average 12.9% each year over the past 10 years, and its current largest investment is in MercadoLibre, an Argentinian e-commerce company.

The top stocks among customers up to age 66

Source: Sharescope, total return

AJ Bell’s customers don't shy away from holding individual companies within their SIPPs. The most popular stock for younger SIPP-holders is Nvidia. The AI darling’s stock price has rocketed in the past few years.

While investors are keen to hold the stock now, this doesn’t necessarily mean that they benefitted from the entire upswing. It’s impossible to anticipate which stock will be the next one-in-a-million success, which is why diversifying your assets is a less risky way to go. Although there’s a small chance of choosing the stock that shoots the moon, there’s a much larger probability of picking a dud.

SIPP customers under 66 years old have stuck to the UK and US markets for their most-popular buys, with four of the top 10 companies based in the US and six based in the UK.

The most popular funds, trusts and ETFs for SIPP investors age 66 and older

Source: FE Fundinfo total return

Investment trusts were popular among this crowd. One of the advantages of the investment trust structure is that it can offer more consistent dividend payments to its investors, because it’s able to hold some money back during high performance years and pay it in a more even keel during low-performance years. This can help those in retirement who would like to have some sort of regular income through their investments.

Scottish Mortgage Investment Trust and City of London Investment Trust are both referred to as ‘dividend heroes’ by the Association of Investment Companies (AIC), meaning they have consistently increased their dividends for over 20 years in a row.

Like the SIPP investors under 66, AJ Bell’s multi asset range is a popular investment option for the older group. While investors over 66 did primarily opt for slightly lower-risk options, such as the balanced fund, interestingly they choose funds with higher return opportunities, like global growth, over the income fund.

The most popular shares for SIPP investors age 66 and older

Source: Sharescope, total return

While the younger cohort of SIPP investors have put their money behind some of the most-popular tech names in the market, those over 66 have stuck to British stalwarts, such as Legal & General, BP and Lloyds.

SIPP holders over 66 have also kept their top holdings within the UK, instead of branching out to global markets. This can have some advantages, such as avoiding extra taxes on non-UK funds and foreign exchange fees.

Investors who are withdrawing from their SIPP also may be keen to hold stocks which pay out healthy dividends, to help fund their retirement spending. L&G has a 9.3% prospective dividend yield, meaning a shareholder with £1,000 worth of the stock would receive £93 in dividend payments in a year.