Compare Investment Trust ISAs
Find the best investment trust ISA to make the most of this year’s tax free allowance.
Investment ISAs put your capital at risk & you may get back less than you originally invested.
- Fund Choice: This investment trust aims to maximise long-term total returns. Nick Train is a believer in legendary investor Warren Buffett's policy of buying good quality companies and holding onto them for a long time. Holdings include Paypal, Diageo & Nintendo. Capital at risk.
- Invest From: £25 pm
- Fund Choice: This investment trust aims to produce long-term capital growth by investing predominantly in businesses in the USA. Top holdings in the fund include Shopify, Amazon.com, Wayfair & Tesla. Capital at risk.
- Invest From: £25 pm
- Fund Choice: Scottish Mortgage Investment Trust is an actively managed by fund manager Baillie Gifford, investing in a high conviction global portfolio of companies with the aim of maximising its total return over the long term. Capital at risk.
- Invest From: £25 pm
Scottish Mortgage Investment Trust is a popular fund which invests on a global basis. Stocks are carefully selected for their strong growth prospects. The trust aims to outperform world stock market indices over a five year rolling period. The managers see themselves as owners of companies rather than renters of stocks. The largest holdings include Tesla and Amazon.
- Fund Choice: Investment trust that invests predominantly in companies that provide, utilize, implement or advise upon technology-based systems, products or services in environmental markets, particularly those of alternative energy and energy efficiency, water treatment and pollution control, waste technology & resource management. Capital at risk.
- Invest From: £25 pm
Why we like it: Launched in 2002 Impax Environmental Markets is one of the UK’s largest environmental focused investment trusts which aims to enable investors to benefit from growth of more efficient delivery of services such as energy, water and waste.
- Fund Choice: This investment trust seeks to achieve long-term capital growth through investing in companies listed in China and Chinese companies listed elsewhere. The Company may also invest in listed companies with significant interests in China. Capital at risk.
- Invest From: £25 pm
- Fund Choice: This investment trust invests in the global healthcare sector and aims to achieve a high level of capital growth. The Trust invests in a diversified portfolio of shares in pharmaceutical & biotech companies & related securities in the healthcare sector. Capital at risk.
- Invest From: £25 pm
Investment trust providing exposure to global healthcare companies with an 1.16% ongoing charge. In order to achieve its investment objective, the Company invests worldwide in a diversified portfolio of shares in pharmaceutical and biotechnology companies and related securities in the healthcare sector.
- Fund Choice: The investment policy is to provide a diversified investment in mining and metal securities worldwide. Capital at risk.
- Invest From: £25 pm
The mining sector is benefiting from the world’s most compelling long-term trends from digital transformation, to the sustainability agenda, to gold and precious metals. Targeting income and capital growth, this investment trust provides a diversified blend of companies designed to benefit from the changing global economy.
- Fund Choice: This investment trust provides investors with access to the potential of companies in the global technology sector. The fund Researches and identifies developing technology trends and investing in the companies best placed to exploit them. Capital at risk.
- Invest From: £25 pm
Investment trust providing exposure to global technology companies. Launched in 1996, Polar Capital Technology Trust plc (“PCT”) has grown to become a leading European investor with a multi-cycle track record. Managed by a team of dedicated technology specialists, the PCT aims to maximise long-term capital growth by investing in a diversified portfolio of technology companies from around the world. Top holdings in the fund include Apple, Microsoft, Google & Facebook.
- Fund Choice: Award winning investment trust offers investors access to the fast moving world of technology. The fund invests in stocks worldwide that have the potential to become tomorrow’s Apple or Google. Capital at risk.
- Invest From: £25 pm
Investment trust providing exposure to global technology companies. Allianz Technology Trust PLC is a UK listed investment trust that offers access to the investment potential of the technology sector. The Trust aims for long-term capital growth by identifying major trends ahead of the crowd and investing in stocks worldwide that have the potential to become tomorrow’s Apple or Google. The Trust invests in mid to large-sized technology companies, holding companies expected to benefit from the continued growth in particular sub-sectors of technology.
What is an Investment Trust ISA?
An Investment Trust ISA is a Stocks and Shares ISA account that invests your money in Investment Trusts.
Your assets in an Investment Trust ISA are therefore immune from the following taxes:
- Capital Gains Tax (tax normally charged on the growth in the value of an Investment Trust)
- Dividend Tax (tax on dividends that Investment Trusts pay)
What is an Investment Trust?
Investment Trusts are companies that invest in a portfolio of other companies within a specific sector or industry.
They are run by professional fund managers who invest in the best companies within their sector, based on their expertise in the industry.
As they are structured as publicly listed companies, you can buy shares of the company through a stock exchange and benefit from the money they make with their investments.
Here are a few examples of some areas and sectors that Investment Trusts invest in:
- UK Smaller Companies
- Global Emerging Markets
- Global High Income
- Europe
- North America
- Asia Pacific
How do Investment Trusts work?
1. As Investment Trusts are listed companies, you can purchase shares in an Investment Trust to hold in a trading account such as a Stocks and Shares ISA.
2. The fund managers don’t invest your money individually – they pool it together with thousands of other investor’s savings to create a large pot of funds to invest with.
3. The fund managers then invest this money in other companies that they believe have the potential to grow and pay dividends.
4. As investment professionals, they consider the longevity and profitability of each company they choose with great consideration and attention to detail.
5. If these underlying companies perform well, then the share price of the Investment Trust will increase. They may also pay out fixed or variable dividends to investors.
6. If your Investment Trusts perform well, your Investment Trust ISA grows in value and you don’t need to worry about paying tax on any of the profits.
What are the best performing Investment Trust ISAs?
The best performing Investment Trust ISA is, unfortunately, impossible to predict.
Past performance is not a guaranteed indicator of future returns. Unfortunately, you can’t just look at the best performing Investment Trust over the last 5 years and think that it will produce exactly the same results.
Every Investment Trust is limited to the sector or region it invests in, and if that particular market performs well, they will likely reap the benefits.
However, if the market performs poorly, they will do their best to mitigate any losses by picking the most resilient companies and even holding more cash to reduce risk.
How do I pick the best Investment Trusts?
Although you can’t guarantee an Investment Trust will perform well, there are some factors you do have control over. Here are some of the key things to consider when comparing Investment Trusts:
- Ongoing Charge – this is the fund manager’s charge that they will deduct from your investment. It may be worth paying more for a highly reputable Investment Trust, but it will also eat into your returns.
- Performance Fee – details of any applicable performance fees are found in the Key Investor Information Documents. Some Investment Trusts charge more if they outperform their benchmark or meet certain performance goals.
- Dividend Yield – this tells you the amount of dividends an Investment Trust has paid previously and indicates what might be paid in the future. You can also find out the frequency of upcoming dividends and usually the details of the next dividend to be paid.
- The area or sector it invests in – pick a sector you think will perform well over the long term. It’s also a good idea to invest in multiple Investment Trusts to diversify your portfolio and spread your risk over various markets.
How do I open an Investment Trust ISA?
- Pick a Stocks and Shares ISA provider. You can open an account with them online, over the phone or by post.
- Add money to your account with a debit card or by setting up a direct debit.
- Choose your Investment Trust(s) to buy, and purchase them in your online ISA account
Frequently Asked Questions
How do I withdraw money from an Investment Trust ISA?
There is no limit to when and how much you can withdraw from an Investment Trust ISA. You just need to sell down your Investment Trusts first which can take a few days.
How much money can I put in an Investment Trust ISA?
You can add up to £20,000 to an Investment Trust ISA in the current tax year, up until 5th April 2024.
Can I lose money in an Investment Trust ISA?
Investment Trust ISAs can go down as well as up in value. Therefore, you could end up getting back less money than you originally invest.
Can I transfer an ISA into an Investment Trust ISA?
You can transfer a Cash ISA or any other ISA into an Investment Trust ISA. You’ll need to complete a form with your new ISA provider to start the process.
Can I have a jointly held Investment Trust ISA?
ISA accounts can only be held by individuals, not couples.
Can I hold multiple Investment Trusts in an Investment Trust ISA?
Yes, most Stocks and Shares ISA providers allow you to hold as many Investment Trusts as you like, but they usually have a minimum investment amount of about £100.
Can I have more than one Investment Trust ISA?
You can have more than one Stocks and Shares ISA open at one time containing Investment Trusts. However, you can only contribute to one Stocks and Shares ISA per tax year. You can transfer ISAs together without it counting towards your ISA allowance.