Nearly half of financial advisers say self-invested personal pension (Sipp) clients have put more money into ESG strategies in the wake of the pandemic.
In a CoreData Research survey of 350 UK financial advisers, 40% said Sipp clients have increased contributions to ESG investments over the past 12 months.
This compares to just 2% of advisers reporting a decline in client ESG contributions. The study said that momentum behind ESG has been boosted by the pandemic.
About a quarter of advisers (23%) said clients have increased Sipp contributions over the last 12 months, compared to just 3% reporting reduced contributions.
Risk
The study has found that Sipp investors have adopted a risk-on approach in a bid to take advantage of buoyant markets and low interest rates in the post-covid era.
This is reflected in a bullish outlook on stocks, with 31% of advisers saying clients have hiked contributions to equities over the last year. This compares to 3% who report that Sipp clients have reduced their equity exposure.
This risk-on sentiment is further evidenced by investor reluctance to keep money in cash. According to 23% of advisers, Sipp clients have lowered cash weightings over the past year. Just 5% said clients have raised cash levels.
As investors have poured money into stocks, they have pulled out of bonds amid the prevailing low interest rate environment and inflation concerns. Some 27% of advisers said clients have cut their bond exposure, with only 3% reporting increased contributions.
Investments
When looking at the most sought-after Sipp investments, open-ended funds are in pole position by some distance.
Some 92% say unit trusts and OEICs are among the top three most popular investments for clients. The next most in-demand investments are commercial property (44%), gilts and corporate bonds (35%) and investment trusts (30%).
Andrew Inwood, founder and principal of CoreData, said: “The fact that almost a third of advisers say investment trusts are among the most popular Sipp investments underscores the growing appeal of these closed-ended vehicles.
“In part, this can be explained by the role of the pandemic in highlighting the ability of trusts to consistently pay dividends through use of revenue reserves.
“Investment trusts also offer access to alternative and private assets which are seeing increased demand as investors look for uncorrelated diversifiers capable of generating attractive returns.”
