I currently have my main pension fund invested with Standard Life with a
sizeable proportion in their cash fund - I'm not so far off retirement.
Since the SL cash fund pays practically zero interest (but does guarantee
capital) I'm looking to move to a SIPP where I can find a better range of
Ideally I'd like to invest part of my fund in Building Society accounts, but
as far as I can gather that's not possible - is this true?
At a very minimum I'm looking for funds which guarantee capital and offer a
reasonable fixed or variable interest rate. Does anyone know of any such
funds that they can recommend?
I read your post with interest as I'm having a similar problem at the
moment. I'm holding cash within a Hargreaves Lansdown SIPP which is
earning practically nothing. Long term I intend to invest this money
into equities when the market has dropped but for the moment I'm
looking to put this money into something within the SIPP where the
money will earn something (even if not a lot) before I put it into
Looking through the range of funds within a SIPP you're right there
doesn't seem to be traditional saving account type funds such as those
offered by building societies. The nearest thing I could find where
money market funds. I don't know a lot about them but they seem to
guarantee your money as they seem to put your cash into different cash
accounts i.e. building societies etc which then earn interest. Check
out the range of such money market funds on the following link
Other than money market funds I think the other option would be to put
the money into fixed interest funds (Corporate bonds, government bonds,
gilts etc). I don't fully understand the bond market so I can't offer
you much advise on this. I'm still reading up on it myself to figure
out where to put the cash that I'm holding within my SIPP. There are
funds within a SIPP that would allow you to invest into fixed interest
I'll be interested to see what other people come back with as I'm in a
similar situation myself (wanting to invest my cash within a SIPP into
something low risk and that's liquid).
Thanks for that link.
I'm wary even about so called cash funds.
I had money in the Standard Life Sterling fund on the understranding that I
a couldn't lose any capital. I was quite shocked when the fund price
suddenly dropped by about 2-3% (iirc). It seems like a lot of the
institutional investors were also shocked since pressure was put on SL and
they agreed to reinstate the value of the fund on the basis that their
documentation had been less than clear. Following this fiasco, they also
introduced a true 'cash' fund which would maintain capital value - except
even that has dropped by a few tenths of a %.
Maybe I'm paranoid, but I get the feeling that all this volatility is
deliberately provoked by people/institutions who know how to read the market
and can ratchet their value up in a saw-tooth market. I tend to think that a
fixed interest rate of just a few % (maybe just 2-3%) would be enough to
beat the FTSE 100 over 5-10 years - I can't see it going much over 6500 in
that time, and certainly not staying there.
Having said that, I've noticed that the my lane on the motorwat always goes
faster after I've quit it!
I had money in the Sterling fund as well, removing it in December 2008
when I realised what had happened, and was active in putting pressure
on SL. You're wrong about the institutions - they were invested in the
institutional variant which had more conservative investment criteria
and maturity profile and was therefore much safer than the retail
varient, which is a common theme across the industry. The managers of
the Sterling fund had participated in the lemming like rush for yield
irrespective of the consequent risk when interest rates were
historically low. They had some unfeasibly large (40% istr)
investments in asset backed securities which they described as short
term investments. Due to the drop in values, in H1 2007 they will
likely have to keep them until maturity, reducing liquidity, and
breaching the fund objectives. I don't believe the fund valuation is
accurate, being on a 'mark to make believe' basis.
As someone who avoided the credit crisis, and is 43% up since it's
start, I concur, as does Gillian Tett in the FT -
"...it is crystal clear that the longer that money remains ultra
cheap, the more traders will have an incentive to gamble (particularly
if they privately suspect that today?s boom will be short-lived and
want to score big over the next year)."
See my previous comments -
Personally I think that Zopa offers the best risk vs. reward available
today, unfortunatly it hasn't been authorised for SIPPs.
If you need just one source of information on the value of stock
markets, use this -