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What do Isa millionaires have in common? Investment trusts make up more than half the biggest pots built up by long-term investors

This Is Money logo This Is Money 22/02/2021 Jayna Rana For
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More than 700 holders of investing Isas that rank at more than a million pounds have one clear thing in common - a hefty weighting towards investment trusts, according to a leading Isa platform.

Interactive investors has revealed that among the 731 pots of a million pounds or more that are held with it, closed-ended funds account for 54 per cent of the average portfolio.

This compares to just 7 per cent held in open-ended funds. The next most popular instrument after investment trusts was company shraes, making up 36 per cent of the average seven-figure pot.

Exchanged-traded products accounted for 2.4 per cent while just 0.2 per cent of the average Isa portfolio was in bonds.

a close up of a sign: There are currently some 731 'Isa millionaires' using DIY investing platform Interactive Investor © Provided by This Is Money There are currently some 731 'Isa millionaires' using DIY investing platform Interactive Investor

This may come as no surprise to some as investment trusts are tend to outperform funds over the long term and 2020 saw the largest ever outperformance of the FTSE All Share by investment trusts.

Investment trusts were also the biggest portion of Isa millionaire pies in last year's survey at an average of 46 per cent. Much of the increase in that percentage seen in the last year is probably down to the stellar growth of some investment trusts like Scottish Mortgage, Baillie Gifford US Growth and JPMorgan China Income and Growth.

Of the 731 Isa millionaires at II today, around a third are women while the average age is 71 - a demographic that doubtless began investing well before the inception of Isas. 

Moira O’Neill, head of personal finance at the platform, said it is inspiring to see how the Isa millionaires achieved their success.

'With an average age of 71, most will have started out with Personal Equity Plans (PEPs), when ISAs were just a twinkle in policymakers’ eyes,' she said. 

'So, the number one lesson is patience – even the millionaires didn’t get there fast. Lesson two is the importance of portfolio diversification – and don’t forget investment trusts. 

Where are the Isa millionaires invested compared to other Isa customers  
Investment  Average millionaire Isa (%)Average Isa (%)
Investment trusts 53.829.1 
Unit trusts 7.4 26 
Bonds 0.2 0.3 
Equities 36.1 39.2 
Exchanged-traded products 2.4 5.4 
Gilts 0.2 0.1 
Source: Interactive Investor as at 15 February 

'Their ability to gear (borrow) to enhance returns, means they can give a portfolio a turbo charge over the long term – but this can also drag down performance further in volatile times, so be prepared for a bumpy ride. Globally diversified trusts are a good place to start.'

It is likely that II's Isa millionaires also have the luxury of being able to use their full Isa allowance each year, which currently stands at £20,000 per year.

The most popular investment trusts held by II's Isa millionaires are Scottish Mortgage, Alliance Trust and Witan Investment trust, all three of which are well-diversified, investing in a range of sectors all around the world.

These were the top three investment trusts bought by Isa millionaires in last year's survey too, though with Alliance trust in first place, followed by Scottish Mortgage. 

Top ten holdings of Isa millionaires 

Scottish Mortgage

Alliance trust

Royal Dutch Shell


Witan investment trust

Lloyds Banking Group

RIT Capital Partners

National Grid


City of London investment trust 

Top ten holdings of all Isa customers 

Lloyds Banking Group



Royal Dutch Shell

Scottish Mortgage

Vodafone Group


Alliance Trust

National Grid


Other top-bought trusts this year include RIT Capital Partners and City of London investment trust, the latter of which is well-known for its annual increasing dividend, now in its 54th year.

For all Isa customers, Scottish Mortgage and Alliance Trust also featured in the top ten most popular holdings.

However the remaining eight positions were made up of shares including Lloyds Banking Group in first place, followed by BP, GlaxoSmithKline and Royal Dutch Shell.  

While these names are indeed UK companies, much of their earnings come from overseas. 

Myron Jobson, personal finance campaigner at Interactive Investor, added: 'Home bias is somewhat of a misnomer. 

'When it comes to international diversification, investors are more likely to use funds, investment trusts and ETFs. 

a man wearing a suit and tie: Interactive Investor's Jobson said overseas exposure can be very rewarding for investors © Provided by This Is Money Interactive Investor's Jobson said overseas exposure can be very rewarding for investors

'Even where investors invest directly in the UK in direct shares, around 75 per cent of FTSE 100 company earnings are from outside the UK.

Nevertheless, Jobson agrees that having international exposure can be very rewarding for active investors. 

In the US, for example, investors have benefited from the double whammy of a strong US market and the weakness in sterling. 

How long could it take to become an Isa millionaire?

The length of time it takes to become an Isa millionaire depends on the amount you can invest and your investment return.

It would take 25 years to reach the £1million mark - £1,002,269.08 to be exact - were you to start investing the full £20,000 annual Isa allowance every year from today ( assuming the allowance stays the same) with 5 per cent annual growth excluding fees. 

If your investments grew by 7 per cent net of fees, you could trim three years off that period, and make £1,048,722.82 in 22 years. 

But if your investment experienced annual growth of just 3 per cent, it would take 31 years to reach a seven-figure sum of £1,030,055.17.


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