Where are under 50s investing for their retirement?

A Self-invested personal pension – or SIPP for short – gives you lots of options over where to put your money.

You will need to juggle quite a few different factors to determine the best investment plan, but among the most important is your current age and the point at which you hope to retire.

Our data shows AJ Bell customers in their 30s and 40s plump for a mix of multi-asset funds, global trackers and growth companies in their pensions.

What are the most popular funds?

The most popular options in the funds category (also encompassing exchange-traded funds and investments trusts) are AJ Bell’s range of multi-asset funds. These vehicles are helpful for customers seeking diversification, as the fund managers select a combination of equities, fixed income and cash investments. Since multi-asset funds include various asset types, they generally carry less risk and typically offer lower returns than pure equity funds.

If you’ve still got a decade or more until you’re going to access your pension, you have time to absorb some ups and downs in the market. This may be why global tracker funds as well as products focused on technology and growth were other popular choices for the under-50 SIPP holders.

Specifically, this encompasses the Scottish Mortgage investment trust which looks to own, in its words, “the world’s most exceptional growth companies” whether they are listed on the stock market or not. It owns several high-profile unlisted names such as TikTok-owner Bytedance and Elon Musk’s satellite venture SpaceX, which is expected to list on the US market this year.

Another popular fund holding is Fundsmith which looks to buy quality stocks and hold them for the long term. It has outperformed the market over the full period since its launch in 2011 but underperformed over the last five and 10 years.

What about stocks?

Individual stocks which are popular with 30- and 40-something pension investors include AI chip giant Nvidia – among the best performing global stocks of the last few years – as well as the other constituents of the Magnificent Seven (Tesla, Microsoft, Meta, Alphabet, Amazon and Apple).

Perhaps surprisingly, Strategy Inc, which is a heavy investor in Bitcoin, is the fifth most popular holding in this subset of pension investors.

Alongside this bias towards technology and growth there are also some more old-fashioned businesses in the list. These include banking outfit Lloyds, insurer Legal & General, Shell and BP. These are shares which were more traditionally bought for their income credentials. It’s evidence that dividends remain an important factor for SIPP investors in their fourth and fifth decades even if they’re not going to draw an income from their pension for some time.

There may also be some fans of legendary investor Warren Buffett among this cohort with his Berkshire Hathaway vehicle, from which he surrendered the CEO seat last year, still widely held.