Stakeholder default funds are performing significantly worse than Sipps invested in unit trusts, says Hargreaves Lansdown.
Its research shows the average performance of 17 major default funds is -10.3 per cent since the birth of stakeholder in April 2001. This compares with an average performance of -5.4 per cent for its 17 most popular unit trusts, net of charges.
Over one year, stakeholder default funds have averaged a 10.4 per cent increase while the unit trusts have risen by 20.2 per cent.
Some IFAs say it is not fair to compare stakeholder and Sipp investors because of the level of advice they receive. But Hargreaves says increased access to data via the internet and the press means increasing numbers of middle-income investors will self-select through Sipps.
Head of pensions research Tom McPhail says: “There will always be the natural stakeholder client and the natural Sipp client. But there are those in between who are prepared to do the investment research and monitor their funds regularly who would be better served by a Sipp than stakeholder.”
Dennehy Weller managing director Brian Dennehy says: “You cannot compare the performance of unit trusts in Sipps with stakeholder default funds. People such as Scottish Widows are offering quality third-party funds in a personal pension with an AMC of 1.5 per cent. That meets the needs of most rational people.”