Drawdown investment ideas
Getting your strategy right
With drawdown, you choose where and how to invest, so you’re in control of the money in your pension. Your financial goals, attitude to risk and the costs involved should all come into play when making your decisions. It’s also likely that your plans around how and when to start drawing an income will heavily influence your investment choices.
Remember your pension income in drawdown isn’t secure. Although there is the potential for gains, the value of your investments and the income they produce can rise and fall. It’s possible to get back less than you invest. You’ll need to regularly review your choices to make sure your income and investment strategy continue to meet your needs.
You can find out more about income strategies in our guide to investing in drawdown.
If you've thought about your drawdown goals, but are unsure how to achieve them, you may want to consider drawdown investment pathways. There are four pathways to choose from, and each matches a potential retirement goal with an investment option.
Investment ideas for three drawdown strategies
When looking for investment inspiration it’s important to remember your own goals, and attitude to risk. Funds are often a popular choice, as they are a collection of investments with a specific aim, chosen and run by an expert fund manager.
The individual fund ideas below have been highlighted by our team of experts as investment opportunities and aim for either long-term growth, to produce an income or to defend against market falls. But remember, past performance isn’t a guide to the future and these ideas aren’t personal advice. You should choose investments based on your own preferences, attitude to risk and research and make sure any investment is held as part of a diversified portfolio.
Take investment advice if you’re not sure. Investments rise and fall in value, so you could get back less than you invest. Please always read the key information and fund factsheet, including charges, of any investment before making any decisions.
Here are three funds which aim for growth in the long-term. As with all investments, their value can fall as well as rise so you could get back less than you originally invest. There’s no guarantee that any investment will give you the long-term growth you hope to receive.
Rathbone Global Opportunities
Invests mainly in large and medium-sized companies with the potential for growth and dominance in developed markets, such as the US, UK and Europe. The fund also has the flexibility to invest in smaller companies and emerging markets, both of which are higher risk.
View factsheet including charges View Key Investor Information
L&G Future World ESG Tilted & Optimised Emerging Markets
Invests mainly in large and medium-sized companies from higher-risk emerging markets such as China, India and Taiwan, while being mindful of environmental, social and governance (ESG) issues. While it’s diversified across many countries and sectors, it may have more ups and downs compared to similar growth-orientated funds that invest in developed markets. The fund can also invest in higher-risk smaller companies.
View factsheet including charges View Key Investor Information
Fidelity Special Situations
Invests in large, medium-sized and higher-risk UK smaller companies that are often unloved by other investors but have the potential to return to favour and recover and see their share price rise. The fund can use derivatives, which adds risk.
View factsheet including charges View Key Investor Information
Here are some funds that aim to pay a high yield.
The value of all investments, as well as the income they produce, can fall as well as rise. You could still get back less than you invest and there’s no guarantee the yield they aim for will be achieved. All of these funds take their charges from capital, which means that whilst they aim to pay a high income, capital growth can be reduced.
Artemis High Income
The fund invests flexibly across the fixed-interest markets, from government bonds to higher-risk high yield bonds. It also invests in some UK company shares, which could boost long-term income and growth. Investments in high yield bonds are higher risk and can add volatility to returns.
View factsheet including charges View Key Investor Information
Schroder Income
The fund invests in shares of UK companies, and aims to provide a high dividend income. It has a clear value style bias and contrarian approach, which means it can look different to the wider stock market at times. The managers invest in a relatively small number of companies, meaning each investment can have a larger impact on overall performance, which adds risk.
View factsheet including charges View Key Investor Information
Baillie Gifford Monthly Income
The fund invests in a combination of shares, bonds and alternatives such as listed infrastructure and real estate investment trusts (REITs). This wide range of assets means that the income profile has the potential to be more resilient over time compared to investing in a single asset class. The fund invests in high yield bonds, emerging markets and derivatives, all of which add risk.
View factsheet including charges View Key Investor Information
Here are three funds that aim to defend against big losses of value during market falls. The value of these funds can still fall. As always there are no guarantees and you could get back less than you invest.
Pyrford Global Total Return
A sensible investment approach. 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 fund also has the flexibility to feature investment in higher risk emerging markets. Please note this fund is an offshore fund so investors are not normally protected by the UK Financial Services Compensation Scheme.
View factsheet including charges View Key Investor Information
Troy Trojan
Aims to help shelter investors’ money during the tough times and grow it over the long term. This fund contains the shares of quality companies, and the manager increases exposure to bonds, gold and cash when he thinks the stock market has less potential to grow and the outlook is less certain. The fund holds a small number of investments including smaller companies, both these factors increase risk.
View factsheet including charges View Key Investor Information
Invesco Tactical Bond
The team can invest in all types of bonds, with very few constraints placed on them. The performance of the fund hinges on the managers ability to interpret the bigger economic picture. They aim to shelter the fund when they see tough times ahead; and seek strong returns as more opportunities become available. While the main focus is on sheltering the value of the fund, they can invest in high yield bonds and use derivatives, both of which add risk.
View factsheet including charges View Key Investor Information
Keeping a cash buffer
It’s important to have a cash buffer, in or outside of your pension. If the market or the income from your investments fall, you’ll have a cash source to draw an income from. This means you won’t be forced to sell when prices are low.
Holding large amounts of cash does come with its own risks though. Cash can lose value over time if inflation is above interest rates.
Why variety can help reduce risk
There’s always some risk with investing, but it’s possible to reduce the impact of the risks you face by making sure you have a good variety of investments.
Different types of investments perform well at different times, and so do different markets around the world. Holding a mixture of investments, across various markets, could help shelter you when some areas don’t perform as well as others.
Guide to investing in drawdown
This guide explains the relationship between investing and taking an income in more detail. It could help to get you thinking about your own strategy and where you might invest.
Expert support and advice
Guidance from Pension Wise
Pension Wise is a free government service for people getting ready to receive a UK defined contribution pension (this could be a personal or workplace pension).
It offers impartial guidance on pension types, how to access savings, and the tax implications of each option.
Helpdesk support
Our Bristol-based helpdesk are here for you six days a week. Our friendly and knowledgeable team are ready to answer your questions no matter how big or small.
Please contact us or schedule a callback at your convenience.
Advice on your retirement plans
Our financial advisers can help you develop a retirement income strategy, ensuring your investments align with your goals.
They'll advise you on the best time and methods for accessing your pension.
Advice on your retirement plans
Our financial advisers can help you develop a retirement income strategy, ensuring your investments align with your goals.
They'll advise you on the best time and methods for accessing your pension.