In the world of Self-Invested Personal Pensions, the quest for the ‘best SIPP funds’ can feel like searching for hidden treasure. 

While the allure of a singular ‘best’ choice lingers, the reality is far more nuanced.

The EveryInvestor team has consulted industry publications and trusted news sources to compile this guide to SIPP funds.

All our content undergoes stringent quality and compliance checks before publication so we can be sure of bringing you only the most relevant and useful information.

This article will guide you through the key considerations when choosing SIPP funds, from understanding the importance of fund performance and management to assessing fees and choosing strategies for managing investment risk. 

Read on to find out what you need to know about SIPP funds.

Which Are the Best SIPP Funds to Invest In?

The best SIPP funds to invest in vary depending on an investor’s individual goals, risk tolerance, and investment horizon. 

However, well-regarded funds usually have a strong track record, low cost ratios, and a management team with a proven market change strategy. 

To reduce volatility, diversified funds across asset classes, regions, and industries are recommended (although it is important to remember that diversification does not always guarantee protection against losses). 

Since retirement investing is personal, it is best to talk to a financial advisor about funds that fit your needs.

Fundsmith Equity Fund I USD Acc

Fundsmith Equity is managed by Fundsmith CEO and CIO Terry Smith and invests in strong, growing companies with unique strengths and low financial risk.¹

According to Morningstar’s analysis, this fund aims to invest in robust, well-managed companies for the long term, using detailed analysis and specific criteria to make informed decisions.²

Fees include:

• Ongoing cost: 0,94%
• Transaction fee: 0,01%
• Management fee: 0,90%.³

Fidelity Global Technology

Managed by HyunHo Sohn, this highly rated fund focuses on undervalued stocks, avoids excessive risk, and benefits from the parent organisation’s positive reputation (according to analysis by Morningstar).⁴

Fees include:

• Ongoing cost: 1,04%
• Transaction fee: 0,31%
• Management fee: 0,80%.⁵

Royal London Short Term Money Market Fund Y Inc

This fund is managed by Tony Cole and Craig Inches.⁶

According to the Financial Times, the fund aims to preserve capital and generate income by investing primarily in safe, short-term financial instruments (cash and equivalents).⁷

Fees include:

• Ongoing cost: 0,10%
• Transaction fee: 0,02%
• Management fee: 0,10%.⁸

WS Evenlode Income B Accumulation

This fund is managed by Hugh Yarrow, lead portfolio manager of Evenlode Income, and Ben Peters.⁹

Moningstar’s analysis notes that the fund’s strategy involves investing in stable, profitable companies while minimising risk and that the parent firm has a good history of making smart investment decisions.

The fund’s strong long-term performance and skilled risk management are also highlighted in this analysis.¹⁰

Fees include:

• Ongoing cost: 0,94%
• Transaction fee: 0,01%
• Management fee: 0,90%

Fidelity Investment Funds IV: Fidelity Open World Fund Lovewell Blake FP Acc

Managed by Chris Forgan and Caroline Shaw, this fund, according to the Financial Times, aims for an average annual return of 7%, provides exposure to a mix of assets globally, and invests at least 70% of the fund in other funds (including those managed by Fidelity).¹¹

Fees include:

• Ongoing cost: 0,95%
• Transaction fee: 0,13%
• Management fee: 0,45%.¹²

What Is a SIPP Fund?

A SIPP fund is a type of investment vehicle that can be held within a Self-Invested Personal Pension (SIPP). 

SIPPs are a form of personal pension scheme that offer individuals in the UK the flexibility to choose and manage their own investments for retirement savings. 

Unlike standard personal or workplace pensions, which typically limit investment choices to a selection of funds chosen by the pension provider, SIPPs allow investors to access a broader range of investment options.

What Is an Investment Fund?

An investment fund is a pool of money collected from multiple investors to invest in securities such as stocks, bonds, money market instruments, and other assets. 

Managed by professional fund managers, it allows investors to diversify their portfolios without the need to directly buy or manage the individual securities themselves.

How do Funds Work in SIPPs?

Funds in SIPPs, in this context, refer to any funds that a SIPP holder decides to invest in as part of their pension portfolio. 

SIPP holders (or their financial advisors) choose these funds to grow their pension pot for retirement.

How Does a SIPP Fund Work?

A SIPP fund works by pooling money from an individual’s Self-Invested Personal Pension (SIPP) to invest in a wide range of financial instruments to grow the retirement savings over time. 

SIPP funds allow investors to allocate pension contributions to stocks, bonds, mutual funds, and ETFs based on their SIPP provider’s options. 

With or without financial advice, investors allocate their contributions to these options for growth, income, or both based on their retirement goals, risk tolerance, and investment horizon. 

The fund’s performance, influenced by market conditions and the success of its assets, will dictate the fund’s value over time. 

Regularly reviewing and adjusting these choices is crucial to keep them in line with retirement objectives. 

Remember

SIPPs offer a more hands-on approach to pension investment, broadening access to various investment opportunities beyond those of traditional pensions. 

This means that the investor bears the responsibility for investment decisions and their associated risks.

What Makes a SIPP Fund a Good One?

What makes a SIPP fund a good one depends on several key factors that align with the investor’s retirement goals, risk tolerance, and investment timeline. 

When selecting a SIPP fund, consider the following:

• Performance history, noting that consistent long-term success may be a good sign, though past performance does not guarantee future results. 
• The management team’s experience and strategy, as those with a proven track record across market conditions are typically more reliable. 
• Costs and fees, as lower expenses can enhance net returns. 
• Diversification within the fund, as this may help minimise volatility. 
• Your financial goals and risk tolerance and whether the fund integrates into your investment strategy to reach retirement without too much risk. 

Is It Important to Choose the Best SIPP Funds?

It is important to choose the best SIPP funds because selecting the right funds can significantly impact the growth of your retirement savings and your financial security in retirement. 

The performance of the funds you select directly influences the value of your pension pot, affecting your ability to meet your retirement goals. 

Additionally, choosing funds that align with your risk tolerance and investment horizon can help manage potential volatility and investment risks. 

Therefore, careful selection of SIPP funds is crucial for optimising your retirement outcomes.

SIPP Funds to Consider for Specific Purposes

SIPP funds to consider for specific purposes vary based on investment goals, risk tolerance, and time horizon. 

For instance:

• For growth, equity funds that invest in high-growth sectors or companies can be ideal. 
• Income-focused investors might look towards bond funds or dividend-paying stock funds for regular returns. 
• For those nearing retirement, a more conservative approach with a mix of bond funds and stable equities might be appropriate to protect capital. 
• Investors interested in diversification might explore global equity funds, emerging market funds, or specialised funds like real estate or commodities. 
• Always research and consider the fund’s performance history, fees, and how it fits with your overall investment strategy.

How to Choose the Best SIPP Funds for Your Needs

To choose the best SIPP funds for your needs, start by assessing your investment goals, risk tolerance, and time horizon until retirement. 

Research and compare funds based on their performance history, fees, and the expertise of the management team. 

Consider diversifying your investments across various asset classes, industries, and geographical regions to spread risk. 

Regularly review and adjust your portfolio to align with changing market conditions and personal circumstances. 

Consulting a financial advisor can also provide personalised advice to help select the funds that best fit your retirement planning strategy.

What Fees Are Associated With SIPP Funds?

Fees associated with SIPP funds can include management fees, which are charged by the fund managers for selecting and managing the investments within the fund. 

There may also be platform fees for using the SIPP provider’s platform to hold and trade your investments. 

Additionally, transaction fees might apply for buying and selling investments within your SIPP. 

Some funds may also charge performance fees if the fund exceeds certain benchmarks. 

It is important to understand all these fees as they can impact the overall return on your investments in the SIPP.

How to Manage Risk in Your SIPP Funds

To manage risk in your SIPP funds, diversify your investments across different asset classes, sectors, and geographical regions to spread risk. 

It is important to check and adjust your portfolio to match how comfortable you are with risk and what your financial objectives are, particularly when market conditions shift or as you get closer to retirement. 

Consider the use of bonds or fixed-income assets to provide stability alongside more volatile equity investments. 

Staying informed about market trends and seeking advice from financial advisors can also help you make informed decisions to mitigate risk more effectively.

Assess the Risk Level

Evaluate your risk tolerance by considering your financial situation, investment goals, and emotional capacity to handle market volatility. 

This involves understanding how much risk you can afford to take and how much fluctuation in investment value you can comfortably endure.

Find the Right Risk/Rewards Balance

Align your investment choices with your risk tolerance and retirement goals. 

Higher-risk investments typically offer higher potential returns but come with more volatility. 

Find investments that offer growth without exceeding your risk tolerance.

Diversify

Spread your investments across asset classes (such as stocks, bonds, and real estate), sectors (like technology, healthcare, and finance), and regions. 

Since different investments react differently to the same economic event, this strategy may reduce the impact of poor investment performance on your portfolio.

The Role of a Fund Manager in SIPP Investments

The role of a fund manager in SIPP investments is to make informed decisions about buying, holding, and selling assets within a fund to achieve the best possible returns for investors, according to the fund’s investment objectives and risk profile. 

To build and manage the fund’s portfolio, they research markets, economic trends, and securities’ performance. 

Their expertise and decisions directly impact the fund’s performance, making their role crucial in helping investors grow their retirement savings within a SIPP.

How Fund Managers Influence the Performance of SIPP Funds

Fund managers influence the performance of SIPP funds through their investment strategies, expertise, and decisions on asset allocation. 

By carefully selecting and managing the assets within the fund, they aim to maximise returns and minimise risks in line with the fund’s objectives. 

Their ability to analyse market trends, economic indicators, and company fundamentals allows them to make informed decisions that can lead to the outperformance of benchmarks and competitors. 

Additionally, their skill in timing the market and adjusting the portfolio in response to changing conditions can significantly impact the fund’s overall success and the growth of investors’ retirement savings.

What to Look For in an Exceptional Fund Manager 

Things to look for in an exceptional fund manager include a proven track record of outperforming benchmarks over the long term, which would demonstrate their ability to navigate different market conditions successfully. 

Check if their investment philosophy matches your goals and risk tolerance and rate how transparent they are about fund strategies and performance. 

Also consider their experience and expertise in the specific asset class or market sector they work in. 

A great manager is adaptable to market changes and thorough in their research and due diligence. 

Common Questions

In Conclusion

Remember, the ‘best’ SIPP funds are not a mythical unicorn, but rather a carefully curated selection based on your individual needs and goals. 

Selecting suitable SIPP funds is an essential aspect of retirement planning that requires careful consideration of your investment goals, risk tolerance, and the long-term growth potential of the funds. 

When you monitor fund performance, fees, and management, as well as market trends and portfolio adjustments, you can make smart retirement savings decisions.

So, embark on your journey with confidence, knowing that the ‘best’ SIPP funds are simply those that pave the way towards a secure and fulfilling retirement.