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Investment ideas

Drawdown
investment ideas

Strategies and investment ideas to help you

Important information: What you do with your pension is an important decision that you may not be able to change. You should check you're making the right decision for your circumstances and that you understand your options and the risks. Drawdown is a higher risk option than an annuity. The government's free and impartial Pension Wise service can help you and we can offer you advice. The information on our website is not personal advice.

Three strategies

Drawdown puts you in control of the money in your pension. But it requires careful management as your income isn’t secure. This makes it a higher risk option than an annuity.

There’s no such thing as a typical drawdown investor. However there are common approaches to taking income. Once you’ve chosen an approach, you can choose investments to complement your strategy.

Take no income

You don’t have to take any income if you don’t want to. You might decide the tax-free cash you take (usually up to 25% of your pension) meets your needs for the time being.

Take income payments

If you plan to take an income, but want your withdrawals to be sustainable, you might decide that taking only the income generated by your investments (in the form of dividends, for example) is the best strategy. This is also known as taking the natural yield.

Draw from capital

You can sell investments to generate cash for your income. However, be particularly aware that if you continue to sell after the market falls, you will weaken your investment’s ability to make up any losses.

Need more information on these strategies and how it influences your investment decisions?

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Your investments

You have more chance of achieving your goals if your investments have similar goals to yours. By regularly reviewing your income and investments, you can check you’re on course.

There are individual fund ideas you could include as part of your portfolio, as well as multi-manager funds. Choosing a range of funds could give you a well-balanced portfolio. But if you’d rather leave this to the experts, choosing a multi-manager fund will give a balanced mix of investments within a single fund.

These ideas aren’t personal advice. You should choose investments based on your own preferences and research. Take advice if you are not sure. Please read the key information and fund factsheet, including charges, before making any decisions.

Investment ideas

Investing for long-term growth

Drawdown investors not taking any income yet may want to choose funds that aim to provide long-term growth.

Lindsell Train Global Equity

  • Manager Nick Train aims to invest in superior companies he believes can beat the competition and endure for the long term
  • He favours companies with well-known brands and products that customers buy again and again, which could help grow long-term profits
  • He invests in a concentrated portfolio of only his best ideas – we like this because each investment can have a meaningful impact on returns, although it increases risk

View factsheet including charges

View Key Investor Information

Schroder Small Cap Discovery

  • Invests in innovative smaller companies that are based in emerging markets, or earn a high share of revenue from these areas. Small firms based in developing countries provide a good opportunity for investors prepared to accept the additional risks
  • Emerging markets should be considered for most long-term growth portfolios

View factsheet including charges

View Key Investor Information

AXA WF Framlington UK

  • Chris St John can invest in UK companies of all sizes, so this allows him to cherry-pick the best opportunities from across the market
  • This flexible approach means he can invest in higher-risk smaller businesses with great potential and hold on to them if they grow into larger companies

View factsheet including charges

View Key Investor Information

HL Multi-Manager Special Situations

  • A ready-made portfolio of our favourite funds. It’s looked after by our team of experts who do the hard work of running an investment portfolio for you
  • It holds a variety of funds investing in companies of all sizes across the globe. Exposure to smaller companies and emerging markets could boost long-term growth, although it increases risk
  • The focus is on managers with long track records of performance, so the fund could make a great choice for the heart of a long-term growth portfolio

View factsheet including charges

View Key Investor Information

Please note the HL Multi-Manager Special Situations and Lindsell Train Global Equity funds hold HL plc shares.

Investing for income

Those taking income generated by their investments (the natural yield) may want to choose funds that aim to pay a higher yield.

Newton Global Income

  • Provides diversified exposure to global stock markets, alongside the attraction of an income
  • The managers invest in a small selection of companies and have the flexibility to invest in emerging markets, which can increase risk. They also find some of the most attractive opportunities in developed areas, such as the US, UK and Europe

View factsheet including charges

View Key Investor Information

EdenTree Higher Income

  • A diversified portfolio that can invest up to 85% in shares from across the globe, including higher-risk emerging markets. The rest is in other investments such as bonds and cash
  • The manager aims for a high and growing income, so he favours companies in good financial health that are able to pay growing dividends or the interest due to bondholders
  • Looks for out-of-favour companies whose share prices have fallen, but have the potential to recover.

View factsheet including charges

View Key Investor Information

Marlborough Multi Cap Income

  • Mainly invests in small and medium-sized companies that could grow their dividends over time
  • Smaller businesses may grow into tomorrow's market leaders, so they also offer the potential for significant capital growth, though they're higher-risk than larger companies
  • We rate the management team behind this fund highly and believe they have the ability to pick some of the UK's most successful smaller businesses

View factsheet including charges

View Key Investor Information

HL Multi-Manager High Income

  • Our investment professionals blend different types of funds and move between areas of the market when more attractive income opportunities emerge
  • Aims to distribute a monthly, high income to investors which can grow over the long term

View factsheet including charges

View Key Investor Information

Defensive investments

If you are drawing from capital, you may favour investments which aim to shelter against market downturns.

Pyrford Global Total Return

  • This fund invests in a combination of shares, government bonds and cash with the aim of achieving long-term growth with less volatility than the stock market. The managers have the flexibility to invest in higher-risk emerging markets
  • We view this as a sensible approach and are encouraged the managers have used the same disciplined investment process for many years

View factsheet including charges

View Key Investor Information

Newton Real Return

  • This flexible fund invests globally across shares, commodities, cash and bonds, including higher-risk high yield bonds
  • We believe this type of fund comes into its own in difficult market conditions. The managers use alternative investment tools to try to shelter investors' wealth during volatile periods, although it can increase risk

View factsheet including charges

View Key Investor Information

HL Multi-Manager Strategic Assets

  • Designed to perform well in a variety of market conditions, but it's not without risk as it has some exposure to emerging markets, smaller companies and high yield bonds
  • The stable core is invested with managers who combine different assets and switch between them at the right time. It also holds some defensive bond funds and others that invest purely in shares to boost growth

View factsheet including charges

View Key Investor Information


Keeping a cash buffer

If you’re drawing from capital, we believe you should consider holding cash to fund some future income. For example, you could choose to have at least two years’ worth of income in cash so you don’t feel rushed into selling investments.

If you’re only taking the income your investments produce you might not need to hold as much in cash, provided you’re happy for your withdrawals to reduce or even stop sometimes.

You should consider what your plans would be if your cash buffer was to run out and your investments still hadn’t recovered from a fall.

While cash can protect the value of the portfolio short term, it’s unlikely to be a good long-term strategy as it offers little growth potential.

Why variety can help reduce risk

While investment risk can't be eliminated altogether, the traditional way to reduce its effect is to use a diversified spread of investments. The impact of picking the wrong asset type, the wrong region, or the wrong sector can be reduced if a portfolio covers a range of assets, regions and sectors.

If you’re not comfortable choosing a range of funds to build a portfolio for yourself, HL Fund Manager’s Multi-Manager funds could help. Each fund is a collection of what we believe are the best funds available to achieve a particular objective, in a single, convenient investment. Because we take care of the day-to-day work of researching and managing these Multi-Manager funds, and the fee of each fund we select is included, they carry a higher charge than standard funds. Our platform charge of up to 0.45% per year also applies. View drawdown charges

Have a question?
Would you like more information?

Download your guide to investing in drawdown for more information about income and investments.

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