Pension-age investors are ploughing their retirement money into fighting climate change and exploring cutting edge technology, new research suggests.T
Pension-age investors are ploughing their retirement money into fighting climate change and exploring cutting edge technology, new research suggests.
The top ten funds bought by people aged 65-80 through Hargreaves Lansdown last month included two trying to make money from companies pursuing positive environmental and social change, and one specialising in automation and artificial intelligence.
Older investors are also showing an appetite for growth, value and emerging markets funds, all at the riskier end of the investing spectrum, according to the data from the UK’s biggest online investing site.
>>>What are the top 10 bestselling funds? Find out below
Investing in retirement: Older investors are putting money in artificial intelligence, China, the US and a greener planet
The popularity of green or ethical funds among over-65s is part of a wider trend.
Investors have poured more than £7billion into responsible funds so far this year, a 268 per cent increase on the same period in 2019 and a new record.
Meanwhile, two major pension providers have announced plans to shift funds into climate-friendly investments and pursue carbon ‘net zero’ goals, citing overwhelming enthusiasm from savers, particularly the young.
This has prompted suspicion of some cynical bandwagon jumping, as major institutional investors feel pressure to support ‘ESG’ – environmental, social and governance – funds.
There is also scepticism that all this money will really go to companies making a genuine difference to the world, or just to ‘greenwashed’ portfolios with little real positive effect.
Some ‘ESG’ funds just weed out companies in the gambling, weapons, tobacco and fossil fuel industries – and might even include some of the latter if they talk convincingly enough about their agenda for change.
However, the Hargreaves data on older individual investors shows that this group are choosing funds trying to make an active impact on the environment and society, and keeping an eye out for opportunities in new technology as well.
Emma Wall, head of investment analysis at Hargreaves Lansdown, says: ‘We’re living longer, and our attitude to retirement is changing to reflect this.
‘Investing in retirement used to focus solely on capital preservation, cash, gold and bonds, but today you want a bit of growth to make your money last the duration – equities.
‘How you allocate to equities in your portfolio in retirement depends on a number of factors, your attitude to risk, other assets, your estate plans and – according to our latest fund flows data – your morals.
‘There are two ESG offerings in the top 10 most bought funds for October among 65 to 80-year-olds, busting the myth that it is only the young that care about climate change.
‘Also popular among retirees are a few cutting edge thematic funds, proving age is no barrier to engagement when it comes to your finances.’
Most popular funds among older investors
What is an ongoing charge?
The ongoing charge is the investing industry’s standard measure of fund running costs.
The bigger it is, the costlier the fund is to run.
The ongoing charge figure can be found in the Key Investor Information Document (KIID) for any fund, usually at the top of page two.
To track down these documents, put the fund name and ‘KIID’ together in an internet search engine. Read more here about investment charges.
Emma Wall of Hargreaves gives a rundown of the best sellers, and how and where they invest.
The list is in alphabetical order.
Baillie Gifford American (Ongoing charge: 0.52 per cent)
This is a growth-biased fund invested in US equities, run by an experienced and talented team.
The fund has been one of the best performing across all asset classes in the past year.
Investors should be wary of buying in after such a strong rally.
Baillie Gifford China (Ongoing charge: 0.78 per cent)
Baillie Gifford are known as experts in growth-style investing, and this China fund is true to their house style.
This growth bias has resulted in a strong performance year to date thanks to a sizable allocation to consumer focused stocks, and the top three holdings are Chinese tech giants Alibaba, Tencent and JD.com.
Baillie Gifford Positive Change (Ongoing charge: 0.55 per cent)
This fund invests in companies they deem to be making a positive impact on society and the environment.
Key targets for positive influence for the fund managers include education, social inclusion, healthcare and climate change.
BlackRock Gold & General (Ongoing charge: 1.17 per cent)
Managed by natural resources stalwart Evy Hambro, this is one of the most established funds in the sector.
It invests in global mining equities, with a bias towards precious metals extraction and processing.
Federated Hermes Impact Opportunities Equity (Ongoing charge: 0.16 per cent)
Invested across nine themes in companies making a positive impact, aligned with the UN Sustainable Development Goals, which include energy transition, food security, health and wellbeing and energy transition.
Fidelity Emerging Markets (Ongoing charge: 1.08 per cent)
Invested in large cap emerging market companies, with a bias towards Asian equities which make up nearly half of the fund.
The fund combines a blend of styles, with the bulk of the fund invested in consumer stocks, tech companies and financial services.
Man GLG Undervalued Assets (Ongoing charge: 0.90 per cent)
A fund which invests in companies the fund manager considers to be undervalued by the market.
Value investing has lagged growth style-stocks for some time, and the fund is down more than 30 per cent this year.
Historically Man GLG has proven a strong house for when value returns to favour.
Polar Capital Automation & Artificial Intelligence (Ongoing charge: 0.98 per cent)
A specialist thematic fund, which should only ever make up a small part of a well-diversified portfolio.
It invests in global technology equities including Microsoft, Amazon and Taiwan Semiconductor.
Polar Capital Global Insurance (Ongoing charge: 0.88 per cent)
Another specialist fund, which again is only suitable for a small allocation in a balanced portfolio.
It aims to deliver returns uncorrelated to stock markets and the global economy by investing in international insurance companies.
Rathbone Global Opportunities (Ongoing charge: 0.78 per cent)
Another growth-style fund, invested in market-leading companies that have fast growing sales and profits with a competitive advantage.
Managed by James Thomson, a fund manager we have high conviction in