How can I invest in a pension for my child?

My wife and I have saved £100 a month into a junior stocks and shares Isa for our four-year-old daughter since she was born. 

I now wish to start a self invested personal pension for her but I’m struggling to find a fund for my needs.

I want to pay £50 a month into the Sipp and wish to follow Warren Buffet’s advice to his wife and invest in a tracker fund for reasonable returns with low fees.

Do you have any thoughts?

James, via email 

McDermott of Fund Calibre recommends some passive and active solutions

Darius McDermott, managing director of funds rating company Fund Calibre, says: Depending on the reader’s risk tolerance, there are a number of choices.

The market Warren Buffet always says is the hardest to beat, is the US stock market. 

Here we would say Vanguard US Equity Index is worth a look. It tracks the S&P Total Market Index, has an annual ongoing charge of 0.1 per cent and has had very good consistent performance.

If the reader wants to have a more globally diversified portfolio, then HSBC FTSE All World index is one to look at. Annual ongoing charges are 0.16 per cent. 

Alternatively, as it is a Sipp for a young child – and therefore the time horizon is a very long one – the reader my like to consider Fidelity Index Emerging Markets to take advantage of the long-term growth opportunities in the developing world. This fund has an annual ongoing charge of 0.2 per cent.

Finally, the reader may also like to consider an actively managed fund that follows some of Warren Buffet’s own investment principles. 

Both Hermes US SMID Equity – which invest in small and medium-sized US equities – and Evenlode Global Income both look for companies with ‘economic moats’ – a business with the ability to maintain its competitive advantage over its peers. 

Both give trackers more than a run for their money even after charges, which are 0.85 per cent and 0.9 per cent respectively.