There are 32 investment trusts which would have made investors more than £1 million if they had put their full Isa allowance into the same trust each year since 1999, data shows.
According to the Association of Investment Companies, software and technology services investor HgCapital Trust would have provided the highest returns, making investors a total of £2.3 million between 1999 and 2023, based on a total investment of £306,560 over the period.
Of course, investing your entire Isa allowance in one place goes against the investment principle of diversification and is not recommended.
However, it is a useful illustration of which investment trusts have performed well since 1999.
Backing tech: The three top-performing investment trusts are all focused on investing in the technology sector
Isas, or individual savings accounts, protect your savings or investments from tax on interest, profits and dividends. In short, Isas are a tax efficient method of saving money.
Currently, the annual Isa allowance is £20,000 per year. This has risen from £10,000 in 1999, which was split between a £7,000 limit for a shares Isa and £3,000 for a cash Isa.
Cash Isas are available to any UK resident over the age of 16, while stocks and shares Isas are available for those over the age of 18.
Jim Strang, HgCapital Trust chair, said: ‘It is very heartening that the company has been able to deliver such compelling gains for shareholders over the last 25 years.
‘This is a solid endorsement of the private equity model and the skill and expertise that the manager, Hg, has employed so successfully over this time.’
The second top-performing fund was Allianz Technology Trust, which invests in global technology firms.
For the same investor putting in their entire Isa allowance since 1999, it would have delivered £2.1 million in returns. Fellow technology investor Polar Capital Technology would have returned £1.9 million over the period.
‘As we often remind investors, we are arguably living in the golden era of technology where companies across most industries become relevant or irrelevant depending on their adoption and use of technology,’ Allianz Technology Trust portfolio manager Mike Seidenberg commented.
The fourth best-performing fund, Scottish Mortgage Investment Trust, also invests 21 per cent of its capital in the technology sector, and would have seen a return of £1.6 million.
However, Scottish Mortgage has proved controversial among investors in recent times due to its exposure to unquoted investments, against the backdrop of a difficult economic environment.
Both Scottish Mortgage and HgCapital invest at least part of their portfolio in unquoted companies.
Scottish Oriental Smaller Companies would have delivered the fifth highest return at more than £1.5 million.
The trust is one of four in Asia-focused trusts that saw returns of more than £1 million. Of these, both Abrdn Asia Focus and Pacific Horizon Investment Trust were among the top ten performers.
Abrdn’s Asia Focus trust was among the top performers, seeing returns of more than £1million
‘It’s been a challenging time for investors recently, with high inflation coupled with geopolitical tensions and an uncertain outlook,’ Annabel Brodie-Smith, Association of Investment Companies communications director, said.
‘In difficult times, it’s important for investors to take a long-term approach to their investments.
‘Investment trusts have been in existence for more than 155 years, surviving two World Wars, the Great Depression, the 1970s era of high inflation, the tech boom (and bust), the financial crisis and the pandemic.’
Of the 32 best performing funds, more than a third of them invest in smaller companies, with four of these firms focused on the UK sector. BlackRock Throgmorton Trust was the best performing of these, returning £1.2 million.
Scottish Oriental Smaller Companies, Abrdn Asia Focus and Fidelity Asian Values, meanwhile, are all focused on the Asia Pacific smaller companies sector.
Despite the returns offered by these investment trusts, it is essential that investors avoid placing all of their eggs in one basket, in order to reduce risk.
‘When investing, it’s vital to spread your risk, as no-one knows which will be the best performing investment trusts in the future,’ Brodie-Smith said.
‘A diversified portfolio which meets your needs is the best way to success over the long-term. If investors are in doubt about which trust is right for them, it’s important to speak to a financial adviser.’
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