In a recent analysis undertaken by leading online pension provider PensionBee, it showed that, on average, around 10% of defined contribution pension savers’ money in the UK is invested in US tech giants including Microsoft, Apple, and Amazon.
The data suggests that, assuming an average pension pot size of £20,000, a typical saver could have just over £2,000 jointly invested in these companies, colloquially known as the 'Magnificent Seven'.
Using data from three default pension funds – provided by PensionBee, Nest and The People’s Pension – it shows that pension savers have approximately £2,033 each invested in these household names.
This allocation roughly consists of £437 in Microsoft, £420 in Apple, £353 in Nvidia, £286 in Alphabet – the parent company of Google – £218 in Amazon, £168 in Tesla and £151 in Meta – the parent company of Facebook.
Average savers’ investments in Magnificent Seven
* Holdings % Equivalent amount for £20,000 pension
1 Microsoft 2.6 £437
2 Apple 2.5 £420
3 Nvidia 2.1 £353
4 Alphabet 1.7 £286
5 Amazon 1.3 £218
6 Tesla 1.0 £168
7 Meta 0.9 £151
*Sums calculated on an average of investments of 84% in equity and 16% in fixed income and other types of assets. Averages made across funds provided by PensionBee (LifePath 2049-2051 Fund) The People’s Pension (Global Investments (up to 85% shares) Fund) and Nest (Higher Risk Fund).
While recently, there have been reports of a dip in performance of these big seven technology leaders, they are still valued at a combined amount of around $12.9 trillion as at the close of April 2024.
Pension funds invest in the big seven US technology leaders due to their usually consistent growth and resilience. These companies boast robust financial performance, global reach and a proven track record of innovation, making them attractive long-term investments for pension funds seeking to secure long term returns.
Additionally, their presence in various sectors of the economy, from technology and e-commerce to entertainment and automotive, offers potential diversification benefits, further enhancing the appeal for pension fund managers.
The analysis comes in the build-up to this year’s Annual General Meeting (AGM) season, where investors have several options to engage with companies and exercise their rights as shareholders, including attending AGM or shareholder meetings, voting on shareholder resolutions, asking questions and voicing concerns or submitting proxy votes.
Interest from savers looking at where their investments are going has increased in recent years. Many are now keen to see those investing their money do so not only in the interests of good financial outcomes, but also for the larger benefit of society.
In a recent PensionBee survey, savers expressed concerns over the practices of some technology companies. When asked about issues including risk of misinformation created by generative Artificial Intelligence; the human rights impact of AI driven advertising practices and the human rights impact of AI deployment, between 60% and 70% of respondents said they would support resolutions aimed at addressing these issues.
Savers can also engage with companies they have investments in in other ways, aside from AGMs, including writing to companies personally, engaging with quarterly earnings calls where financial performance is discussed or taking part in investor advisory groups or committees – for those companies that have them – to solicit feedback and input on various matters.
Clare Reilly, Chief Engagement Officer at PensionBee, commented: “At this year's AGM season, it's crucial to recognise that pension savers' interests are intricately tied to the activities of some of the largest companies in the world.
“Through our pension savings, we’re all investors in the biggest tech giants that dominate our everyday lives – from our smartphones to the convenient online marketplaces we use to shop.
“Whether or not we actively monitor our investments, our retirements, and even our ability to retire at all, currently hinge upon the fortunes of these companies. Part of the reason they feature so heavily in pension funds is their scale, but also their financial performance. Love them or loathe them, our lives are inexorably linked to their success.”
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