Who wants to be an ISA millionaire?

Max King looks at the investment trusts that have produced the best returns for investors over the past two-and-a-half decades

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The Association of Investment Companies (AIC) recently published a list of all the investment trusts which would have made investors millionaires if they had invested their full ISA allowance in each year since 1999 in that one trust.

This would have involved investing a total of £286,560 plus reinvested dividends. The AIC assumes investment at the start of each tax year.

There were 28 names on the list, ranked according to current portfolio value. Top of the list is HgCapital (LON: HGT), which would have made investors a total of £1.84m, followed by Pacific Horizon (LON: PHI) (£1.49m) and Scottish Mortgage (LON: SMT) (£1.48m).

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Interestingly, the top performers since April 1999 are numbers five and six on the AIC’s list. Aberdeen Asia Focus (LON: AAS) and Scottish Oriental Smaller Companies (LON: SST) have each returned over 3,600%. This shows investment timing matters - despite the good overall performance of each trust, buying at the right or wrong time could have enhanced or detracted from performance.

There are some other interesting features of the list. There are five specialist UK smaller companies trusts on the list, but none focusing on the UK in general. Among the global trusts, neither F&C (LON: FCIT) nor Alliance Trust (LON: ATST) makes the list, though Scottish Mortgage features even though its share price has more than halved from its all-time high in November 2021. Mid Wynd (LON: MWY) is also on the list.

The only equity income trust on the list is JP Morgan Global Growth & Income (LON: JGGI). The problem with income investing is, according to the principle of “a bird in the hand is worth two in the bush,” an extra £1 of income involves roughly £2 less capital gain for a lower total return. If all the investor is going to do with the income is invest it in the same shares, what’s the point?

The JP Morgan trust does not sacrifice capital for income, but draws on capital for about 70% of its 4% yield, thereby preserving total return. Investing in equity income trusts might make sense for those wanting to draw income from their ISAs or for someone wanting to “bed & ISA” an existing holding but not for those seeking a higher long-term total return.

The figures for ISA millionaires

It is easy to pick holes in the AIC research. No sensible investor would devote all of their ISA allowance to one holding, even an investment trust, year after year (and the AIC is not suggesting that).

In an ideal world, an investor would have bought 24 of the holdings on the AIC list in different years, preferably at a time when it was temporarily out of favour, but it would be impossible for the AIC to cover all the permutations that this would involve.

There are some surprising omissions. Finsbury Growth Trust (LON: FGT) surely qualifies having multiplied in capital terms eight-fold in 20 years, having persistently yielded 2% to 3% and having been in existence in 1999. No doubt its manager, Nick Train, is pointing out the omission to the AIC.

The omission of JP Morgan Emerging Markets (LON: JMG) is also surprising given that its share price has multiplied 12-fold in 20 years.

There are probably some trusts that don’t quite make the cut because their shares are trading at huge discounts to net asset value - such as Pantheon (LON: PIN) or TR Property (LON: TRY). This doesn’t mean they should be crossed off a buyer’s list; perhaps the opposite. The current low share price might provide an excellent opportunity to buy a great long-term performer at a cheap price.

The same may be true for trusts with great performances relative to their benchmark indices but in areas that are currently out of favour. The obvious example is Japan. The share price of Baillie Gifford Japan (LON: BGFD), with a negligible yield, has multiplied ninefold in 20 years but is unchanged over five years. If the Japanese market picks up, its performance should rebound.

Some trusts do not make the list simply because they were first launched less than 24 years ago. This applies to nearly all the alternative income sector, though most of them will probably never qualify. Their combination of high yield and low risk will surely ensure stable but modest returns. The exceptions could include 3i Infrastructure (LON: 3IN), whose share price has more than tripled since its flotation at the end of 2007 and has had an average yield of about 5% (around 3.4% today).

Other trusts started the period as slow performers and have since accelerated (such as Oakley Capital (LON: OCI)) or suffered ructions and a change of strategy along the way (such as 3i (LON: III), not to be confused with 3i Infrastructure above) since when performance has significantly improved. Both look likely to retain momentum.

How to become an ISA millionaire

The point of the AIC study (available on their website www.theaic.co.uk) is not to provide a foolproof list of the best investment trusts in the market, but simply to show that an ISA investor putting money at the start of every year into investment trusts up to the maximum and then leaving the holdings alone could have multiplied their money nearly four-fold over 24 years.

All the trusts on the AIC list are quality names but it is not an exhaustive list of quality trusts. The list makes a great starting point for those wishing to start or add to an ISA portfolio but are unsure of what to choose.

As the AIC shows, investment trusts will not make you rich quickly but they may do so slowly.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.


After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.