Where the City’s movers and shakers have their say. Today, it’s Victoria Scholar, head of investment at Interactive Investor, with the notebook pen, talking how pensioners invest their money, rising mortgages, and a new hot property on the market
Female pension savers outperforming
At Interactive Investor (II), we have just launched a new report, the II SIPP (Self-invested Personal Pension) index. For the first time, we lift the lid on how our pension savers are investing for retirement. This new index will provide a barometer of how SIPP customers are investing and positioning their pension portfolios during their working life and in retirement.
One of the key standouts is the importance and value of simplicity when it comes to your pension. Passive tracker funds have gained in popularity across all age groups during the past two years. It’s a similar story when it comes to ETFs, where customers increased their weightings, while reducing their allocation to investment trusts and cash over the same period. Passive funds provide a low-cost and simple way to ‘own the world’. Meanwhile they also offer investors exposure to exciting sectors, such as technology.
With the huge gender pension gap in the headlines, it’s great to our female SIPP customers outperforming in the last couple of years, compared to their male counterparts. Female SIPP customers under 56 have achieved 11.5 per cent growth in the last two years, compared to 10.9 per cent for men. Interestingly, female customers have a higher weighting to investment trusts and a lower weighting to individual shares than male SIPP customers.
Perhaps against expectations, our data shows that those in retirement are still keen investors and are less risk adverse than we might expect. With many of us living for longer, the majority of retired SIPP customers are choosing to stay invested in retirement, with portfolios remaining broadly similar across age groups. Retired customers invest 91 per cent of their portfolio. In contrast those in accumulation, who are still paying into their pension, invest 88 per cent of their portfolio on average.
Dividend hero funds and investment trusts, which continually increase their dividend payouts, are particularly popular with retired customers. They provide a regular and predictable income, which is attractive for customers who are drawing income from their pension.
Breezy does it
Wind is on track to overtake gas as the main source of electricity in Britain for the first time this year amid the shift towards renewable energy. According to Offshore Energies UK, wind has outperformed gas in the first four months of 2024 with the potential for further outperformance across the rest of this year. The report said, “It is possible wind (onshore and offshore) will be the largest supply source of electricity this year. Wind has provided more supplies than gas in the first four months of the year.”
Mortgages moving on up
According to Rightmove, first time buyers are now paying £1,075 on average for a mortgage per month, up 61 per cent since the last election or up £667 since 2019. This underscores the financial strain facing Britons attempting to get onto the first rung of the housing ladder. The stamp duty holiday during the pandemic pushed up house prices across the country. Plus with inflation having pushed interest rates up, the cost of borrowing has increased too. That’s forcing potential home owners into smaller properties, or into ultra-long loans.
Got a spare £11m?
Credit: WETHERELL
Princess Diana’s family home has gone on sale for the first time in 22 years with a price tag of nearly £11m. It is an almost 5,000 square foot, four-story property located at 24 Farm Street in Mayfair with a lift connecting all levels. The house is where she was first introduced to the al Fayed family at a party in 1996. Since the early 2000s it has belonged to Alan and Mary Hobart, founders of the Pyms Gallery in Mayfair.
Credit: WETHERELL
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My podcast pick
On the Money – Interactive Investor
Scottish Mortgage, Fundsmith Equity and Lindsell Train UK Equity are three of the biggest household names with retail investors that are looking to back a professional fund manager. One thing they all have in common is that they have seen their performances come off the boil over the past three years. I enjoyed listening to the latest On The Money podcast episode, which unpicked the reasons why each fund has been out of form, as well as considering the prospects for a turnaround in fortunes. Another recent episode that provided plenty of interesting insights considered the prospects for UK smaller company shares, which have plenty of recovery potential having been harmed by rises in interest rates.