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‘Sipps already have mass market appeal’

Sipps are already mass- market pension vehicles, according to research by Hargreaves Lansdown.

The results challenge the view that Sipps are favoured by risk-taking investors, with more than a quarter of client money held on deposit.

Sipps are expected to spread to lower-earners after A-Day but Hargreaves Lansdown says there is evidence that this is alr- eady happening.

The firm says among its 5,382 Sipp clients, the average single-premium investment is 5,386 for men and 4,307 for women.

Transfer values are rel- atively low at an average of 23,596 for men and 15,901 for women.

Looking at a breakdown of assets held by the company’s Sipp clients, 52 per cent is invested in unit trusts and Oeics and 27 per cent is held in cash. Only 0.13 per cent is held in hedge funds while 15 per cent is invested in UK equities.

Head of pension research Tom McPhail says the study shows evidence of the outperformance of unit-linked funds compared with life funds.

The average fund in the IMA balanced managed, cautious managed and UK all companies sectors outperformed their ABI counterparts over one, three, five, seven and 10 years.

McPhail says: “We are pushing Sipps as a mass-market product and our average case sizes reflect this. We are saying as an Ipod is to a CD, so a Sipp is to a personal pension.”

Standard Life marketing technical manager John Lawson says Standard has higher average case sizes for its Sipp – nearer 200,000 – as it focuses on the transfer market.

Lawson says: “Standard is mainly taking transfer business from clients looking to go into income drawdown so the transfer values are much higher.”


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Value remains within European equities

By Rob Burnett, Neptune European Opportunities Fund

In recent months, investors have become more pessimistic about both the European and the US economic outlook and yet stockmarkets have pushed on to new highs. Some would argue that this is a worrying divergence. We would take the opposite view. This appears to be classic bull market behaviour. A wall of worry has been rebuilt, and stockmarket resilience should be taken as a sign of strength. The market is discounting an improving economic outlook ahead, particularly in the south of Europe.


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