Assets that have created Isa millionaires

Assets that have created Isa millionaires

Investors with direct equity investments in their portfolios are the most likely to have grown their Isa pot to £1m over the past twenty years, new data has shown.

Interactive Investor has conducted research among its clients and found Isa millionaires were likely to have 59 per cent invested directly in equities, 23 per cent invested in investment trusts, with cash and unit trusts at 7 per cent, and bonds and Exchange Traded Funds (ETFs) making up the remainder.

The widest held equity among Interactive Investor clients with assets of £1m or more was Royal Dutch Shell, followed by Glaxosmithkline and Lloyds Banking Group.

The most popular investment trusts were Scottish Mortgage and Primary Healthcare Properties while the most widely held open-ended funds among the Isa millionaire clients were Fundsmith Equity and First State Asia Global Leaders.

The average number of holdings in an Isa millionaire’s portfolio on Interactive Investor is 34, while the average number of trades is 46 per year, which is five times more trades than the average client.

Rebecca O’Keefe, head of investments at Interactive Investor said: "While the average number of holdings and annual trades amongst Isa millionaires may seem extreme, when you have a large portfolio and most of your assets are in directly held equities, you will want to choose a broad variety of different stocks to generate exposure to different sectors.

"Our Isa millionaires have been very successful investors who love the markets enjoy investing and are actively engaged looking after their portfolio, so will buy or sell when they see a good opportunity. Trading less than once a week with a large portfolio seems quite moderate in these circumstances."

Investors who used the maximum Isa allowance for every one of the twenty years since the tax break was introduced, would have contributed £206,000 to date.

Data from the Association of Investment Companies (AIC) shows that investors who had placed all of their annual Isa allowance in the Aberdeen New Thai investment trust, and made the investment on the first day of the tax year every year, would have returned more than £1m by January 31, 2019.

It is the only investment trust that would have returned this amount in this scenario, according to the AIC, with the Aberdeen Standard Asia Focus the next best performer at £966,042.

Annabel Brodie-Smith, communications director of the AIC, said: "Isas are 20 years old this year and it’s impressive to see how well so many investment companies have performed over that period.

"One investment company would have made investors an Isa millionaire and another five would have given investors over £900,000."

David Scott, an adviser at Andrews Gwynne, said: "We run portfolios on a discretionary basis, so when we use direct equities it tends to be for larger portfolios to add some spice.

"I think execution only platforms would have clients interested in direct equities because they can offer deals on dealing charges."