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The funds and shares picked by ISA millionaires

Hargreaves Lansdown has identified the top shares and funds held by investors with ISA portfolios worth more than £1 million.

 
The funds and shares picked by ISA millionaires
 

Online stockbroker Hargreaves Lansdown has revealed the most popular shares and funds held by its growing legion of 'ISA millionaires'.

The platform now has 168 investors with £1 million or more in an ISA, an increase from just three in 2012.

Sarah Coles, personal finance analyst at the platform, said their investments showed they had ‘balanced mainstream portfolios, positioned to take advantage of growth opportunities, without going overboard’.

All of the 10 most popular shares, listed below in alphabetical order, are large, established FTSE 100 businesses.

10 most popular shares

  • Aviva (AV)
  • BP (BP)
  • GlaxoSmithKline (GSK)
  • Legal & General (LGEN)
  • Lloyds (LLOY)
  • National Grid (NG)
  • Rio Tinto (RIO)
  • Royal Dutch Shell (RDSA)
  • Unilever (ULVR)
  • Vodafone (VOD)

The funds ISA millionaires hold in their portfolios are most likely to be large in, run by a well-known name, and with a UK focus. They are below, again in alphabetical order.

Fund Manager Size
Artemis Income Adrian Frost and Nick Shenton £6bn
Fidelity Special Situations Alex Wright £3.3bn
Fundsmith Equity Terry Smith £13.8bn
Invesco Perpetual High Income Mark Barnett £9.7bn
Woodford Equity Income Neil Woodford £7bn
Lindsell Train Global Equity Michael Lindsell and Nick Train £3.9bn
Marlborough Multi Cap Income Siddarth Chand Lall £1.6bn
Marlborough Special Situations Giles Hargreave £1.5bn
Marlborough UK Micro-Cap Growth Giles Hargreave £1.1bn
Stewart Investors Asia Pacific Leaders Ashish Swarup £783m

 

Coles said making the right investments wasn't just about picking winning shares and funds, but having a long-term strategy.

‘Successful investors have built a coherent strategy, taken a sensible amount of risk, been committed during the difficult times, and adopted a long-term view,’ she said.

She added that in order to become an ISA millionaire you should ‘start now’ as it’s the only way to get to the £1 million mark.

Investors should make sure they use up as much of their allowance, currently £20,000, as they can.

‘If you had invested your full allowance into (ISA predecessors) PEPs and then ISAs each year, you could have put away more than £250,000 in contributions,’ she said.

Investors should make sure they reinvest the dividends paid by shares and funds as the compounding of the growth had a ‘profound effect’, she said.

Coles also encouraged investors to take enough risk if they are putting money aside for 10 years or more, and warned off leaving money sitting in cash where it would be eroded by inflation. Investors should also considering investing in emerging markets.

‘These are generally riskier investments than those in more developed countries, but in return they can tap into economies with the potential for faster growth,’ she said.

Increasing the risk increases the potential for returns but also losses, and Coles said it was important not to ‘chop and change too much’ as investing is a ‘long term process’.

‘Switching investments in an effort to time the markets will bring higher transaction costs and may mean you miss out on the long term growth story of a fund or share,’ she said.

‘Building a large and successful portfolio is about time in the markets rather than timing the market, so when things are more difficult, the key is to buy rather than sell.’

31 comments so far. Why not have your say?

Michael Loveridge

Mar 01, 2018 at 16:48

The one thing they all have in common is high yield. This has always been the traditional way to build a high value portfolio - picking high yield shares and reinvesting the dividends.

The problem now is that there are too many companies paying out dividends they can't afford. Dividend cover has fallen dramatically over the past few years, and many companies now paying good dividends may not be able to continue doing so.

At that stage the traditional High Yield Portfolio strategy may start looking very suspect.

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Jeff Duncan

Mar 01, 2018 at 16:50

Can't believe that there are no Invest Trusts or ETFs. Might be something to do with HL earning less commission on these investments

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Malcolm Bridge via mobile

Mar 01, 2018 at 17:10

How many people can afford to invest enough to reach £1M, however well they invest it?

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Rob Walker

Mar 01, 2018 at 17:18

I like that bit..."Coles also.....and warned off leaving money sitting in cash where it would be eroded by inflation"....what's wrong with waiting for the crash?? If we are talking about accumulating over 25 years, then waiting for the next crash and then investing could be very rewarding. Of course, who in Financial Services wants you to avoid investing at any time, even when the market still looks over-valued?

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ANF via mobile

Mar 01, 2018 at 17:24

Interesting that HL has only 3 more than six years ago despite equity markets having been so supportive

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colin fellowes

Mar 01, 2018 at 17:26

When do you anticipate the next crash to be Rob ?

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Rob Walker

Mar 01, 2018 at 17:44

Well you might agree it will happen within the next three years. Taking that as an assumption, there will be a point within those 3 years when your investments will be worth less than today (unless you buy gold, or are a very clever investor). So why not put £20k a year into an ISA as cash and see what happens ? Have another look at share prices on a typical day in 2009/10 and see where they were 5 years later. Are you suggesting that couldn't happen again, anytime soon?

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Zippycar

Mar 01, 2018 at 17:49

ANF

There were just 3 in 2012

Now there are 168

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Jan Bloomberg

Mar 01, 2018 at 17:50

Im adopting the approach that whatever I put in half is cash, the other in high yield with dividend re-investment. I'm keeping the cash stash for the next big shopping trip - which is to say, when the markets crash and everyone piles out, I'll be piling in. Till then the divi reinvestment can do its thing. Only hindsight will tell me if its right or wrong, but thats my view anyway

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Dennis .

Mar 01, 2018 at 18:01

The big crashes of mid 70's 87, 99 and 2007 have one notable feature in that they usually involve a new generation of people in the financial world who have only ever seen markets rising. The other feature is that no one sees them coming until afterwards when the analysts explain with full clarity what was going wrong but failed to see it themselves. As for waiting for the next crash (wasn't it last month?) then to take on example, if I had stood on the sidelines for the past five years and not invested £100k in Fundsmith I would be looking at a deposit account with about £105k in it rather than £360k. Now tell me again why I should keep out of the market? Even if the market fell by 50% I would still be better off.

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Dennis .

Mar 01, 2018 at 18:06

Looking at the list of funds it's interesting that anyone with enough brains to acquire a £1m ISA does the following

1. Has anything invested in Woodford funds

2 Keeps it all in HL

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colin fellowes

Mar 01, 2018 at 18:10

Well Rob, the market has had a great run since the crisis in 2008/9. Common sense says it's due a correction at some point soon but when has the stock market followed common sense ? Trying to time it is a mug's game. It really depends on your time horizon. If you have many years before you need to access it, then I'd leave it to ride in the market. If you need it to live on imminently then that's a different matter. I'm keeping 10% cash in my ISA, the rest is riding the ups and -- inevitable -- downs. All the best to fellow investors.

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Long Term Investor

Mar 01, 2018 at 18:14

As ISAs were launched in 1999, so the 'Millionaires' appear to have achieved remarkable growth from their investments. I calculate it at 14.75% compound for those making it this year after maximum input each year. How the three did it in 2012 is either very lucky, or there is there some other way to invest in ISAs?

My own performance, also on a high yield strategy have been much less impressive!

It would also be interesting to know the percentage Value split between Shares and Funds for these outstanding Investors..

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DIY

Mar 01, 2018 at 18:16

Malcolm,

Not so onerous as you now believe. Start as soon as possible. ISA's are brilliant - it is all your own money, no dodgy HMRC rules. Pensions money carries tax incentive on the way in, and large tax liabilities on the way out!

So I started age 38 with dear old PEPs. Family furious 'cos I didn't spend the all the dough on holidays. Now at age 80 I am not an ISA millionaire. Mainly 'cos I set up ISAs for the wife, 2 kids, 2 grandchildren. Funny, they ain't now complaining too much!

I am not a smart investor. Recommend you spend less time on your mobile.

All sincere best wishes. But PLEASE don't tell Corbyn about ISA's. He will tax the hell out of them as soon as he gets the chance.

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Rob Walker

Mar 01, 2018 at 18:17

Hi Colin, many strategies for many circumstances, I'm sure. But this arrticle is specifically about millionaires over a 25-year horizon, and if that's your plan I'd say don't start yet! - that's all.

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Dennis .

Mar 01, 2018 at 18:24

Don't forget that in 1990 Tessa (tax exempt special savings account) came out well before PEPs

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colin fellowes

Mar 01, 2018 at 18:37

Hope I've got 25 years left Rob, that'll put me at 95 -- At which point I'll probably revert to cash !!

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Dennis .

Mar 01, 2018 at 18:40

Talking of time horizons I read a letter in the FT a few weeks ago about a couple in the early 90's who had a big house and land and were thinking that perhaps they should do some financial planning. #nevertoolate

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Dennis .

Mar 01, 2018 at 18:42

sorry for the typo the couple were in their early 90's

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Paul Hutchings

Mar 02, 2018 at 05:38

Long term investor

It did include other tax exempt schemes prior to 1999 ie Peps, and possibly even Tessa’s ?

This would make the £1,000,000 quite achievable without too much trouble.

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citymoke

Mar 02, 2018 at 15:40

@Malcolm Bridge - If anyone watches the TV programme 'Can't Pay, We'll Take It Away' on Channel 5, then you'll be made very aware of the realities of the economic state of the nation and its decline. At various stages throughout the programme they give out the UK economical statistical data of which the poor people highlighted in this programme are affected. These people aren't in a position to invest a single bean, let alone ever having a hope of becoming millionaires. If one is to believe the worrying data that is broadcast on that programme, then it's a growing minority who are in that position!

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Hmmmmm

Mar 03, 2018 at 11:03

@citymoke

Hint - channel 5 poverty porno does not reflect the 'state of the nation'

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citymoke

Mar 03, 2018 at 11:47

@Hmmmmm It reflects the trend that the nation is heading towards. I'm sure that the data that they quote on the programme is not made up!

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Long Term Investor

Mar 03, 2018 at 12:49

Thank you Paul, I had forgotten about TESSAs and PEPs. That brings the rate down considerably to 9.75%. Still a good performance, but perhaps they had the wisdom to avoid the Tech disaster of 2000 and the Bank bust of 2008 which caught me out.

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Roger Savage

Mar 03, 2018 at 13:32

@ citymoke - some people struggle through no fault of their own and undoubtedly need support. However, there are others who are being held down by those who support their poverty mindset under the guise of helping them to believe they're 'disadvantaged' or 'entitled to something for nothing', etc...

A whole charity industry exists to support and propagate this belief - such organisations are part of the problem, not the solution (as are TV programmes which compound such beliefs). This is why the benefits bill continues to burgeon. A better approach would be to encourage and support people to take responsibility for their own self improvement - i.e. giving people the skills they need to get out of a rut - i.e. low paid employment or no employment.

It won't work for everyone and some will still need support under the original intention for unemployment benefits - a *temporary* safety net until they sort themselves out.

In countries where there is no benefits safety net (and I believe there should be - but, again, just that a temporary safety net) people will strive harder to support themselves and dig themselves out of a rut.

Meanwhile, there are individuals who decide they don't want to be a burden on the state and end-up worse off than those on benefits.

Back to the point of this article - it wouldn't surprise me at all if there is a tax raid on ISAs above a certain value. Pensions have been regularly targeted, I see ISAs as the next target. Not a reason to avoid ISAs at all but something to consider.

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citymoke

Mar 03, 2018 at 13:59

@Roger Savage - good points made. Thanks for an intelligent response.

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Paul Hutchings

Mar 03, 2018 at 20:48

Roger Savage

Very well reasoned piece.

Interesting but about the countries with no benefits for abled bodied persons not working.

Having just returned from Singapore I was made aware of the fact that this country has around 1% unemployment, with no benefits available to those able to work.

I fully realise this would not make a fair comparison to the UK but found this very interesting all the same...

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Mr J

Mar 04, 2018 at 10:11

You can open an ISA with £10. There is no law to prevent poor people buying shares.

Some people seem happy spending £30-40 per month on mobile phones but nothing on saving and investing for their own futures. Some people seem happy to educate themselves on football facts and statistics, or the scrap price of metal, but will not spend one moment educating themselves on how to save and invest.

I think any attempts to tax ISAs will create an enormous reaction. Many older people are now reliant on them for income.

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The Old Man

Mar 04, 2018 at 11:44

Thank you all for a most interesting discussion. If its any help to say it I find holding onto shares during a falling market the most difficult part of being an investor. But if you take a long term view, which all serious investors should,it is crucial to your success.

I started over 50 years ago saving £20 per month, which was a struggle, but holding on and even adding to holdings when markets head south is vital to achieve long term double digit annual growth over 30 or 50 years. Dividend re and pound cost averaging are also key. Good luck to you all and I hope you live to enjoy spending some of it in due course, Mr Corbin allowing!

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Paul Hutchings

Mar 04, 2018 at 22:32

The Old Man

Hats off to you Sir !!!! :)

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DIY

Mar 05, 2018 at 19:10

Mr J

Totally correct that many older persons are reliant on income from ISAs. Me too!

Trouble is Corbyn considers people who actually carefully save and invest in "sophisticated" vehicles like an ISA in the Stock Market are the filthy rich.

Likely such people would be prime targets if he gets into Number Ten. Far from being deterred, he would gain much delight from any enormous reaction from the filthy rich.

Maybe I am cowardly, but I am also sore afraid.

Thank you for your input.

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