SIPP investors add portfolio diversification as market confidence rises

Last month Hargreaves Lansdown SIPP and SIPP drawdown investors added more diverse assets to their portfolios, including equity income and corporate bonds.

This comes after retirees concentrated on the US, tech trackers and AI in November.

In a briefing note on 8 January, Emma Wall, head of investment analysis and research, Hargreaves Lansdown said: “Last month, SIPP and SIPP drawdown investors bought into a diverse range of funds, as markets, and investor confidence across all sectors, rose.

"The previous month’s trades were crowded into just a few sectors – the US, tech trackers and AI proved popular with retirees, even those looking to take an income from their portfolios, and therefore should be looking to manage portfolio volatility. But the improved interest rate outlook clearly made an impact on investor trading last month, as December most bought tables saw equity income and corporate bond funds make an appearance."

She continued: "That is not to say retirement savers have sworn off their love of tech – far from it. Global tech funds, tech-biased global equity funds and even specialist artificial intelligence investments still feature in the top 10 for December. Hardly surprising when you consider the Magnificent 7 stocks – Apple, Alphabet, Microsoft, Amazon, Meta, Tesla and Nvidia – returned 111% on average in 2023, compared to 24% for the S&P 500 as a whole, and just 2.4% for the FTSE 100.

"But past performance is no guarantee of future returns and, based on valuations, the outlook from here is more rosy for the domestic market vs the fair-to-overvalued US – though you’ll need to take a multi-year view and a selective – actively managed – approach to see those gains.”

Source: Hargreaves Lansdown