Three investment trust ideas for an ISA

· With the end of the tax year fast approaching, here are three investment trust ideas that investors could consider for this year’s stocks and shares ISA allowance.

· ISAs offer a way to shelter your investments from UK income and capital gains tax. It means you can make the most of your investments.

LIS Show – MPU

· The deadline to use this tax year’s ISA allowance is 5 April.

Kate Marshall, lead investment analyst, Hargreaves Lansdown:

“During the pandemic, the number of people investing in stocks and shares ISAs surged spectacularly. Since then, the cost-of-living crisis has taken a toll, but the landscape still looks very different to before the pandemic. The market volatility we’ve seen could still be with us for some time, but it’s important to remember that investment goals are usually long term in nature, meaning investors need to see through the short-term changes in value. ISAs are a great way to save for the long term and here we have three investment trusts that are focused on trying to grow your investment over the long term.

City of London Investment Trust

UK equity income investment trusts are a convenient way to invest in a mix of dividend-paying UK companies, and to access one of the highest-yielding stock markets in the world. Job Curtis, manager of this trust for over three decades, likes larger, more stable companies which often have multinational operations. This provides the trust with exposure to both domestic and global growth. Investment trusts have more flexibility than open-ended funds to smooth out the ups and downs of the stock market and help maintain a rising and sustainable income. City of London Investment Trust has increased its dividend for 57 years, the longest record of any investment trust.

JPMorgan Emerging Markets Investment Trust

Emerging markets have strong growth potential, which makes investment trusts focused on the area suitable for ISAs with a long investment horizon. Over the years, rapid industrialisation, growing populations, and a desire to succeed have helped transform countries in the region. JPMorgan Emerging Markets Investment Trust could be well-placed to take advantage of the changes taking place across these markets. The trust is managed by experienced investors Austin Forey and John Citron. It provides diverse exposure to countries ranging from China and India, to Taiwan and Brazil.

Scottish American Investment Company

Global investment trusts provide a good foundation to an investment portfolio focused on long-term growth, income, or both. Investing in companies across the globe provides a good level of diversification in a single trust. This trust is one of the oldest investment trusts around, having launched in 1873. James Dow and Toby Ross, the current managers, search globally for companies with the potential for sustainable growth and a reliable dividend. They mainly invest in shares in developed markets, which should provide a dependable income stream and the potential for above inflation profit growth. They should also demonstrate resilience through the economic cycle. Some investments in UK commercial property and global bonds provides useful diversification, while some infrastructure and property shares help diversify the income paid to investors and could deliver growth ahead of inflation. The trust has increased its dividend every year for 50 years.”

Investment Trusts’ performance

1 year (28/02/23 to 29/02/24) 3 years (28/02/21 to 29/02/24) 5 years (28/02/19 to 29/02/24) 10 years (28/02/14 to 29/02/24)
JPMorgan Emerging Markets Investment Trust PLC -6.73% -21.50% 24.18% 126.79%
Scottish American Investment Co. PLC 0.14% 21.20% 56.37% 182.35%
The City of London Investment Trust PLC -3.73% 27.47% 24.43% 59.99%

Source: Lipper

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Victoria Bartlett
 Senior Manager,  Hargreaves Lansdown

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