A total of 28 investment companies would have made investors millionaires if they had invested the full annual ISA allowance in the same company each year, according to new data from the Association of Investment Companies (AIC).
Investing the full ISA allowance annually from 1999 to 2020, a total of £246,560, and reinvesting the dividends into one of the eight investment companies below would have generated a tax-free pot of over £1,500,000 by 31 January 2021.
Thirteen investment company sectors feature in our list of 28 ISA millionaire investment companies (below) with the UK Smaller Companies sector featuring most often. Half of the ISA millionaires list (14 companies) are from the smaller companies sectors.
Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Twenty-eight investment companies would have made investors millionaires if they had invested the ISA limit in the same company each year, with many companies returning far more than £1 million. The investment companies come from a wide range of sectors which demonstrates the benefits of the investment company structure for delivering strong returns over the long term.”
It’s worth highlighting that half of the investment companies that have made investors ISA millionaires are in the smaller companies sectors. Their closed-ended structure makes investment companies particularly suitable for investing in harder-to-sell assets like smaller or unquoted companies.
“Whilst it’s always fun to dream of becoming an ISA millionaire and have that ‘what if’ moment, it’s important not to put all your eggs in one basket. No-one can tell which will be the best-performing investments in future and it’s important to have a diversified portfolio which suits your long-term needs,” Brodie-Smith added.
Scottish Mortgage tops the list with a total of £2,541,100, more than ten times the original investment.
Among the leading investment companies were:
- Scottish Mortgage
- Biotech Growth
- Allianz Technology
- Pacific Horizon
- JPMorgan China Growth & Income
- Edinburgh Worldwide
- Polar Capital Technology
- HgCapital Trust
“Our aim is to provide long-term capital appreciation to shareholders, at low cost,” said Tom Slater, Joint Manager at Scottish Mortgage. “We are bottom-up, actual investors who look for transformational growth companies which enjoy sustainable competitive advantages that play out over many years. Consequently, rather than allocating funds on a different regional basis, investments are chosen based on our best ideas on a global basis. Over the last decade our portfolio has combined investments in both public and private companies, at a cost that provides real value to shareholders. Competition for capital within the portfolio is higher than ever which will enable us to deliver strong investment returns to savers in the years ahead.”
Among the other leaders are Biotech Growth Trust managed by Geoffrey Hsu and the Alliance Technology Trust managed by Walter Price. Biotech Growth Trust focuses on investing in biotech innovation over the long term with a global mandate, while the Allianz Technology Trust has earned plaudits for its ability to capture the massive growth in the tech industry which we have experienced since 1999.
Other investment companies which ranked high on the list from the AIC include BlackRock Throgmorton Trust and Baillie Gifford Shin Nippon.
Investment company ISA millionaires
| Investment company | AIC sector | % share price total return 06/04/1999 to 31/01/2021 | Total at 31/01/2021 |
|---|---|---|---|
| Scottish Mortgage | Global | 2,249 | £2,541,100 |
| Biotech Growth | Biotechnology & Healthcare | 2,321 | £1,901,581 |
| Allianz Technology Trust | Technology & Media | 1,713 | £1,837,161 |
| Pacific Horizon | Asia Pacific | 3,348 | £1,778,352 |
| JPMorgan China Growth & Income | Country Specialist: Asia Pacific – ex Japan | 2,561 | £1,767,284 |
| Edinburgh Worldwide | Global Smaller Companies | 958 | £1,574,323 |
| Polar Capital Technology | Technology & Media | 1,314 | £1,553,346 |
| HgCapital Trust | Private Equity | 2,605 | £1,552,220 |
| BlackRock Throgmorton Trust | UK Smaller Companies | 1,490 | £1,363,990 |
| Baillie Gifford Shin Nippon | Japanese Smaller Companies | 1,286 | £1,331,163 |
| Worldwide Healthcare | Biotechnology & Healthcare | 2,315 | £1,311,467 |
| BlackRock Smaller Companies | UK Smaller Companies | 1,311 | £1,256,713 |
| International Biotechnology | Biotechnology & Healthcare | 2,044 | £1,246,089 |
| Oryx International Growth | UK Smaller Companies | 988 | £1,243,074 |
| Montanaro European Smaller Companies | European Smaller Companies | 1,111 | £1,208,138 |
| Aberdeen Standard Asia Focus | Asia Pacific Smaller Companies | 3,123 | £1,198,211 |
| Herald | Global Smaller Companies | 970 | £1,136,097 |
| Schroder AsiaPacific | Asia Pacific | 1,531 | £1,113,545 |
| JPMorgan Smaller Companies | UK Smaller Companies | 1,327 | £1,110,979 |
| JPMorgan Emerging Markets | Global Emerging Markets | 1,608 | £1,104,132 |
| Standard Life UK Smaller Companies | UK Smaller Companies | 693 | £1,101,928 |
| Monks | Global | 909 | £1,071,649 |
| Rights & Issues Investment Trust | UK Smaller Companies | 1,549 | £1,051,067 |
| Aberdeen New Dawn | Asia Pacific | 1,983 | £1,049,646 |
| Scottish Oriental Smaller Companies | Asia Pacific Smaller Companies | 2,839 | £1,043,496 |
| JPMorgan European Smaller Companies | European Smaller Companies | 1,687 | £1,040,997 |
| Invesco Asia | Asia Pacific | 1,045 | £1,027,966 |
| JPMorgan US Smaller Companies | North American Smaller Companies | 1,216 | £1,009,865 |
