Today, I’m taking a closer look at the top five funds owned by Hargreaves Lansdown self-invested personal pension (SIPP) investors in their 50s. Here are the most popular funds in alphabetical order, along with one, three and five-year performance figures.
Baillie Gifford American
As its name suggests, this fund invests in a range of companies that are listed in, or conduct a significant proportion of their business in, the US. Its main objective is to provide capital growth. Top holdings currently include Amazon, Netflix and Tesla while Facebook and Google are also top-10 holdings.
Returns:
1-year: 46%
3-year: 132%
5-year: 187%
Fees: 0.52% per year
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Fundsmith Equity
Run by well-known portfolio manager Terry Smith, this is a popular fund that invests globally. It currently has a 60% country weighting to the US and an 18% weighting to UK stocks and top holdings include Paypal, Amadeus and Microsoft.
Returns:
1-year: 19%
3-year: 92%
5-year: 157%
Fees: 0.97% per year
Lindsell Train UK Equity
With a focus on UK stocks, this fund is run by highly-regarded portfolio manager Nick Train and his co-portfolio manager Michael Lindsell. The portfolio managers keep the portfolio concentrated and look for high-quality companies that are leaders in their industries. Top holdings currently include Diageo, Unilever and RELX.
Returns:
1-year: 15%
3-year: 52%
5-year: 84%
Fees: 0.7% per year
Lindsell Train Global Equity
Train and Lindsell’s popular global equity fund also makes the top five list. This fund is also highly concentrated, only holding around 30 stocks, yet invests all around the world. It currently has a 35% weighting to the US, with 28% and 21% of the fund allocated to the UK and Japan respectively. Top holdings are quite similar to the UK fund and include Unilever, Diageo and Heineken.
Returns:
1-year: 25%
3-year: 84%
5-year: 153%
Fees: 0.54% per year
Standard Life Global Smaller Companies
Lastly, we have Standard Life’s Global Smaller Companies fund, which aims to provide long-term growth by investing in a portfolio of smaller companies from around the world and is designed for investors who are comfortable with a higher level of risk. Top holdings here include GrubHub, Fevertree Drinks and Aspen Technology with nearly 50% of the fund currently allocated to US stocks.
Returns:
1-year: 24%
3-year: 96%
5-year: 127%
Fees: 0.79% per year
Takeaways
There are several interesting takeaways from this list of funds. First, UK investors appear to have a preference for international stocks at present, with only one UK-focused fund among the top five. Finance textbooks will tell you that the majority of investors have a ‘home bias’ yet this clearly isn’t the case right now for British investors, which is not surprising when you consider Brexit uncertainty. Could UK stocks be a good contrarian play though?
Second, given that all five of the funds above are growth funds, it appears that investors in their 50s still have quite a high tolerance for risk. Again, this goes against conventional wisdom as we’re often told that investors should reduce their risk as they near retirement.
Third, no Neil Woodford funds make the list. It looks like investors have lost patience with the portfolio manager after several years of poor performance.
Fourth, looking at the performance figures above, it appears that many investors in their 50s have done very well over the last few years. These funds are a good example of the rewards that are on offer from the stock market if you’re willing to accept a bit of risk.
