Top SIPP funds hit by market turmoil

SIPP investors’ five favourite funds have been hit hard by the European and US debt crisis which took a heavy toll on equity markets.

Fears after EU wrangling over the Greek debt restructure and the eleventh hour US debt deal caused financial turmoil.

Standard & Poor's downgrade of US debt from AAA to AA this week also caused further losses on the US markets, dragging the FTSE and other gobal markets down too.

SIPP providers have recommended gold and commercial property as safe havens for spooked investors, but best selling funds through the pension plans have already been severely hit.

In May, Alliance Trust published a list of its investors' favourite funds for SIPP investment in 2010-11.

Over the past month, the top five from that list have all suffered losses.

Best seller Vanguard FTSE Developed World UK Equity Index fund recorded a loss in cumulative performance terms of 17% between 11 July and 9 August, according to Trustnet figures.

Over the month, second and third favourites Vanguard US Equity Index and FTSE Equity Index funds also saw losses of 19% and 15% respectively.

Trojan and Standard Life Investments' Global Absolute Return Strategies funds, fourth and fifth on the list, took less of a hit, with losses of just 1% and 1.75% respectively.

However, other SIPP investors with more diversified portfolios will have been spared the worst of the market falls.

Greg Kingston, head of marketing at Suffolk Life, said: "This morning as many investors were greeted by a sea of red, over 4,000 of our investors may have paid slightly less attention as they have invested directly in commercial property.

"Property hasn't been without its ups and downs in recent times, however many of our property investors also occupy the premises as part of their business."

Martin Tilley, sales and marketing director at Dentons Pension Management, said: "Gold has proved not only a safe haven of late but an appreciating asset class. Gold can be held through funds indirectly but is often mixed in with other natural resources and sometimes mining stocks which have moved with the market."