With their focus on long-term returns, investment trusts deserve a closer look for any investors still looking to use their 2023/2024 individual savings account (ISA) allowance before the 5 April deadline.

A long-term home for your savings

It’s 25 years since ISAs were first introduced to help savers build wealth for the future in a convenient and tax efficient way. With a £20,000 personal allowance to use for the current tax year, and with no tax to pay on any income received or on any future profits made, it can be well worth using your annual allowance to shelter even more of your savings from the tax man.

Because investment trusts typically seek to generate returns over decades, not just years, they can make a suitable choice for long-term ISA savers. To mark the 25th anniversary of ISAs, the Association of Investment Companies (AIC) has looked at how much a £7,000 ISA investment made back in April 1999 (the original annual ISA allowance) would be worth now had it been invested in one of the 25 top performing investment trusts of the last 25 years. Although past performance does not guarantee future ones, the results are compelling, with 18 of the investment trusts featured turning the original £7,000 ISA allowance into a nest egg of over £100,000.¹

How investment trusts work

Investment trusts are structured as companies and listed on the stock exchange. They’re designed to generate profits for shareholders by investing in other companies, offering investors a way to diversify their holdings, particularly in global markets, and can target a regular and growing income as well as medium- to long-term capital growth.

Investors buy shares in investment trusts, rather than units, as they would in a fund, and only a fixed number of shares exist. While shares can trade at a premium or a discount to the underlying value of a trust’s investments depending on supply and demand, the investment trust structure can give portfolio managers more certainty to allow invest for the long term, and can keep trading costs and fees down.

Investment trusts can be opened with a one-off lump-sum deposit, but most trusts allow investors to set up a regular savings scheme, which can be especially useful for those with relatively small sums to invest or if you want to try to avoid timing the market, like with all investments capital may be at risk.

Finding the right investment trust

Investment trusts offer a wide range of options for ISA investors to choose from, including UK-focused equity income or growth-oriented trusts, as well as global equity, emerging markets and even multi-asset or real asset options. Deciding which type of trust is right for you will depend on your attitude to risk and what investments you currently hold, as well as your growth or income objectives.

J.P. Morgan Asset Management has a strong commitment to investment trusts and over 150 years of experience managing them. Five of our investment trusts have made the AIC’s list of top 25 performers over the last 25 years, which is more than any other investment trust manager. These five trusts are JPMorgan Indian Investment Trust plc, JPMorgan European Discovery Trust plc, JPMorgan Emerging Markets Investment Trust plc, JPMorgan US Smaller Companies Investment Trust plc and The Mercantile Investment Trust plc.

While the five J.P. Morgan trusts featured in the AIC rankings represent a broad spread of strategies, reflecting our expertise across markets, our full range of investment trusts provides many other exciting long-term growth and income opportunities for ISA investors to explore.

Decide before ISA deadline day on 5 April

The deadline for this tax year’s ISA allowance is fast approaching. Investment trusts offer a time-tested way to put your savings to work by investing in global markets, backed by some unique features that can help unlock attractive long-term returns, generate a regular income and manage risk along the way.

However, whether you’re looking to invest for this tax year, or exploring opportunities for the next, it’s important to choose an investment trust manager with the resources required to support you over the entire span of your investment. At J.P. Morgan Asset Management, the investment trusts that we manage are supported by the deep research capabilities of over 1,100 investment professionals based in markets around that world. And while it’s impossible to know which trusts will be the future best performers, our broad range can help investors to build a diversified ISA portfolio that’s fully focused on meeting their long-term financial needs.

This is a marketing communication. The views contained herein are not to be taken as advice or a recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are, unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all inclusive and may be subject to change without reference or notification to you. The value of investments and the income from them may fluctuate in accordance with market conditions and investors may not get back the full amount invested. Past performance and yield are not a reliable indicator of current and future results. There is no guarantee that any forecast made will come to pass. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our EMEA Privacy Policy www.jpmorgan.com/emea-privacy-policy. This communication is issued in Europe (excluding UK) by JPMorgan Asset Management (Europe) S.à r.l., 6 route de Trèves, L-2633 Senningerberg, Grand Duchy of Luxembourg, R.C.S. Luxembourg B27900, corporate capital EUR 10.000.000. This communication is issued in the UK by JPMorgan Asset Management (UK) Limited, which is authorised and regulated by the Financial Conduct Authority. Registered in England No. 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP.

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