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Britain’s pension funds have come under fire for pulling back from stocks and investing instead in safer, but less lucrative assets such as bonds.
Jeremy Hunt, the Chancellor, has said he is concerned “pensioners and future pensioners are not getting the returns that they could expect”, and is planning to set out reforms to help reverse the trend later this year.
Sir Nigel Wilson, the head of Legal & General, has backed urgent change, warning that a lack of investment means Britain’s economy risks being left behind.
Figures released earlier this year by the think tank New Financial showed that 53pc of pension funds’ total assets were invested in UK stocks in 1997, but this had plunged to just 6pc in 2021.
So if you want to manage your own pension and back Britain, where should you invest?
Telegraph Money asked the experts for their top fund picks.
Primary Health Properties
This listed fund provides modern, purpose built health clinics.
Rob Burgeman, an investment manager at wealth manager RBC Brewin Dolphin, says: “The NHS is likely to face substantial structural reform over the next few years and there is a clear understanding that the solution needs to be a better provision of healthcare at the primary level – GPs practices and clinics – rather than in hospitals. This should help to support Primary Health Properties”.
Like most property companies, the shares have been revalued to reflect a higher interest rate environment and currently offer a yield of around 6.17pc.
Cordiant Digital Infrastructure
This listed fund invests in and operates digital infrastructure assets, with a focus on data centres, mobile telecoms and broadcast towers, and fibre-optic networks in the UK, Europe and the US.
Mr Burgeman says it boasts an “experienced team of people from the industry” and targets a 9pc annual return and a progressive dividend policy.
Within its current pipeline of new opportunities of around £3bn, around 28pc are in the UK. The shares currently yield 4pc.
JLEN Environmental Assets
This listed fund invests in a broad range of environmental assets, covering wind, waste, anaerobic digestion, solar, hydro and many other areas.
These areas are likely to remain very much in focus over the next decade, as Britain moves towards a low-carbon economy. JLEN has around 95pc of its investments in the UK and currently yields around 5.9pc.
HICL Infrastructure PLC
With a portfolio of mainly public-private partnerships with assets located in the UK, this listed fund’s holdings include mobile towers, Thameslink rolling stock, fibre networks and other large infrastructure assets.
Rob Morgan, an analyst at wealth manager Charles Stanley, says a lot of its money comes from Government-backed contracts which are uprated in line with inflation. He says it offers safe, sustainable returns and the managers are very experienced in backing assets relating to utilities.
Greencoat UK Wind
Focusing specifically on onshore and offshore wind farms in the UK, the returns of this listed fund are primarily in the form of income.
Mr Morgan says the returns are around 5pc. He says the income should rise over time because it is linked to energy prices, which have been increasing.
BlackRock Smaller Companies Trust
The investment trust focuses on a broad range of smaller UK companies. Its managers look for good quality companies trading at reasonable prices.
Mr Morgan says it will primarily deliver yields in the form of capital growth, with dividend income at around 2.5pc currently. He says UK companies are trading at bigger discounts at the moment so investors can get in at a “quite a good entry point, we would suspect, for the longer-term”.