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28 investment companies would have made ISA investors millionaires – AIC report highlights

– Scottish Mortgage returns £2,541,100

– Seven further investment companies return over £1.5m

– Returns show power of investment company structure for long-term investing

– Full table included below

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). Today’s research makes for interesting reading as the list of constituents includes companies operating across a range of different sectors from smaller companies and Asia to technology and biotech.

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.

  • Scottish Mortgage
  • Biotech Growth
  • Allianz Technology
  • Pacific Horizon
  • JPMorgan China Growth & Income
  • Edinburgh Worldwide
  • Polar Capital Technology
  • HgCapital Trust

Scottish Mortgage tops the list with a total of £2,541,100, more than ten times the original investment.

Thirteen investment company sectors feature in the list of 28 ISA millionaire investment companies 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.”

Comments from the top three performers

Tom Slater, Joint Manager of Scottish Mortgage, said: “Our aim is to provide long-term capital appreciation to shareholders, at low cost. 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.”

Geoffrey Hsu, Portfolio Manager of the Biotech Growth Trust, said: “The strong performance of the Biotech Growth Trust over the past two decades demonstrates the value of investing in biotech innovation over the long term. We believe a portfolio structured to capture biotech innovation worldwide will continue to deliver attractive shareholder returns while supporting the development of important new medicines for patients in need.”

Walter Price, Portfolio Manager of Allianz Technology Trust, said: “We think technology is constantly innovating, and we are looking for leaders in subsectors that are lowering customers’ costs or developing a new method of work. Our goal is to build a portfolio of these leaders with great business models and to own them as they mature. Every day, these businesses are trying to build wealth for their stakeholders and working for us as their shareholders. We think this methodology is a great way to invest for growth for our shareholders.”

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

Source: AIC/Morningstar. Performance is share price total return to 31 January 2021 if the maximum ISA limit for each year had been invested on 6 April in each company annually from 1999 to 2020.

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