Top 10 holdings in your pension

Clare Reilly

by , Chief Engagement Officer

at PensionBee

31 Aug 2022 /  

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Investment products like pensions often contain a mix of asset classes, from bonds to company shares, or equities. This strategy of diversification, is designed to spread the level of risk and reward as each asset class performs differently. Bonds are basically loans given by investors to companies and provide a fixed income based on an agreed interest rate. Shares are portions of company ownership where the company’s value, divided by the number of shares in issue, forms the individual share price - which fluctuates in value.

Putting your pension under a microscope, you’ll see that you probably own a miniscule percentage of a multitude of the world’s largest and most successful companies, like Apple and Microsoft. These company shares make up some of the equity portion of your pension, and individually are known as holdings within your pension plan. The ‘top’ holdings in your pension refer to the companies you have the largest investment in. When your pension is invested through PensionBee, these companies are carefully selected by the world’s biggest money managers.

Keep reading to find out the top 10 holdings in the equity portion of your pension plan, and why those companies have been chosen by our money managers.

1. Tailored Plan top 10 holdings

PensionBee’s Tailored Plan is available in eight vintages, depending on your target retirement year, and all of the vintages are managed by BlackRock. The plan invests your money differently as you go through life, moving your money into ‘safer’ investments, such as bonds rather than equity for example, as you get older. This type of plan is known as a target date fund. It works by matching your date of birth to a sub-fund of an appropriate risk level. The table below is based on our most popular vintage of the Tailored Plan, LifePath 2037 - 2039.

Top ten holdings Equity proportion of plan (73%)
Apple 2.5%
Microsoft 2.2%
Amazon 1.1%
Alphabet A 0.7%
Alphabet C 0.7%
Tesla 0.7%
Taiwan Semiconductor Manufacturing 0.5%
NVIDIA 0.5%
Johnson & Johnson 0.5%
UnitedHealth 0.5%

2. Shariah Plan top 10 holdings

PensionBee’s Shariah Plan is managed by HSBC Global Asset Management and State Street Global Advisors. The plan invests your money into Shariah-compliant companies only. Our Shariah plan is socially responsible, as companies included are all approved by an independent Shariah committee.

Top ten holdings Equity proportion of plan (100%)
Microsoft 7.6%
Apple 7.3%
Amazon 5.3%
Alphabet A 3.4%
Tesla 3.2%
Alphabet C 3.2%
Johnson & Johnson 2.4%
NVIDIA 2.3%
Meta 2.2%
Exxon Mobil 2.0%

3. Fossil Fuel Free Plan top 10 holdings

PensionBee’s Fossil Fuel Free Plan is managed by Legal & General and excludes the fossil fuel and tobacco sectors. This plan is also socially responsible, as companies included are all aligned with the Paris Agreement goals.

Top ten holdings Equity proportion of plan (100%)
Microsoft 5.8%
Apple 5.6%
Amazon 3.0%
Alphabet A 1.6%
Alphabet C 1.5%
UnitedHealth 1.3%
Taiwan Semiconductor Manufacturing 1.1%
NVIDIA 0.9%
Toyota Motor 0.9%
Home Depot 0.8%

4. 4Plus Plan top 10 holdings

PensionBee’s 4Plus Plan is managed by State Street Global Advisors. The plan invests your money in a range of assets that are adjusted on a weekly basis depending on market conditions by experts at State Street Global Advisors. This type of target return plan has an actively managed component, so adjustments are made regularly by finance professionals.

Top ten holdings Equity proportion of plan (34%)
Apple 0.9%
Microsoft 0.8%
Amazon 0.4%
Taiwan Semiconductor Manufacturing 0.3%
Alphabet A 0.2%
Tencent 0.2%
Tesla 0.2%
Alphabet C 0.2%
Alibaba 0.2%
UnitedHealth 0.2%

5. Tracker Plan top 10 holdings

PensionBee’s Tracker Plan is also managed by State Street Global Advisors. The plan invests your money in global shares, bonds and cash. Investments follow the world’s markets as they move. This type of plan is passively managed, as investments track global markets.

Top ten holdings Equity proportion of plan (80%)
Apple 2.8%
Microsoft 2.6%
Amazon 1.3%
AstraZeneca 1.2%
Shell 1.1%
Alphabet A 0.9%
Alphabet C 0.8%
Tesla 0.8%
Unilever 0.7%
UnitedHealth 0.7%

Preserve and Pre-Annuity Plans

PensionBee’s Preserve Plan is managed by State Street Global Advisors. The plan makes short-term investments into creditworthy companies, which reduces risk and preserves your money. There’s no equity component to this plan, so there’s no top ten company holdings.

PensionBee’s Pre-Annuity Plan is also managed by State Street Global Advisors. The plan invests your money in bonds to provide you with returns that broadly correspond to the cost of purchasing an annuity. Like the Preserve Plan, there’s no equity component.

Summary of holdings

Why are these holdings chosen?

Across the different plans you can see Apple, Microsoft, and Amazon feature as the top holdings, these are currently the world’s biggest companies. Customers often ask us why their UK pension is invested in US companies. This is because one of the core objectives of a money manager is to maximise investment returns, and pension funds will invest in markets that help them achieve that objective.

At time of writing, the S&P 500 (the main US equity market) has returned 70% compared to the FTSE 250 (the main UK equity market), which has returned a negative 2%, in the same five year period. These US companies are the most valuable globally, giving investors a strong probability of growing their wealth.

Company Performance over 5 years (%)
Apple 324%
Microsoft 280%
Amazon 189%

You may also wonder ‘if they’re so profitable, why do they make up such a small percentage of my pension?’. The short answer is diversification. Those three companies are all US based and within the technology sector.

Spreading your investments, whether that’s geographically, across industries, or across asset classes means if there’s a loss in one of these areas, it won’t severely impact your investment. This reduces the overall risk.

Do other pension providers invest this way?

Yes. This isn’t a unique approach to retirement saving, or even investing broadly. Using pension provider Nest as an example, we can evaluate their 2040 Retirement Fund:

Top three holdings Equity proportion of plan (58%)
Apple 2.2%
Microsoft 2.0%
Amazon 1.3%

The top three holdings and equity proportion of the plan are comparable to PensionBee’s Tailored Plan (LifePath 2037 - 2039) because these are profitable investments.

Will my holdings be changed?

Yes. Currently we’re living in a time where the technology sector is highly lucrative for investors. ‘Big tech’ like Apple and Microsoft have held the top spot of most valuable companies for over a decade, but this hasn’t always been the case.

Before that oil and gas giant, ExxonMobil, was the biggest company. And even further back the multi-industry company, General Electric Company, held the top spot. Money managers will make informed decisions based on global appetite and change holdings accordingly.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

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