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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.
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.
|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.’