Interactive Investor

Big jump in ISA millionaires at interactive investor

14th February 2022 09:41

Jemma Jackson from interactive investor

Funds given cold shoulder in favour of investment trusts.

  • 983 ISA millionaires on ii platform – up from 731 a year ago.
  • The average age of an ii ISA millionaire is 72 compared to 56 for the average ii customer.

Some 983 ISA millionaires are with interactive investor, the UK’s second largest DIY investment platform, data published today reveals.

This is up from 731 last year* and is nearly half of the total ISA millionaires in the UK, according to the latest data from HMRC, obtained by InvestingReviews.co.uk

Interactive investor’s data is from 31 January 2022, while HMRC’s data, published in the same month, was taken on 6 April 2019, but the high proportion of ISA millionaires at ii is thought provoking. ii’s fair flat fee means that as ISA investments  increase in value over time, customers’ fees stay the same, allowing them to keep more of their wealth.

Where are ISA millionaires putting their money?

Whereas investment trusts have historically tended to play second fiddle to funds in terms of popularity, ii customers are well aware of their long-term advantages, and ISA millionaire customers especially so.

Investment trusts are powering ii ISA millionaire portfolios, accounting for nearly half (46%) of the average ISA millionaire account, compared to just 7.6% for funds. Investment trusts are ahead of equities (38.3%), and ETFs (just 3.1%). In contrast, the average ISA account overall has 25.5% in investment trusts. ISA millionaires are also holding close to 50% less cash in their ISA accounts.

Asset splits

Asset

Millionaires

All ISA

Cash

4.6%

8.9%

Equities

38.3%

37.9%

Funds

7.6%

21.7%

ETP

3.1%

5.5%

Investment Trusts

46.0%

25.5%

Other

0.4%

0.4%

Moira O’Neill, Head of Personal Finance, interactive investor, says: “Congratulations to all the savvy investors who have grown their ISAs to £1 million-plus. They will be able to draw tax-free cash and income from their portfolios, while anyone who accumulated substantial investments outside an ISA wrapper will be feeling the pain of capital gains and income taxes.

“But, with the average ii ISA millionaire aged 72, it’s a reminder that investing is a marathon, not a sprint.

“Ask any professional athlete, and they’ll tell you the key to crossing that finish line in one piece, was the consistent, and diligent habits they developed and stuck with in the run up to the event. Think of a short-term investment win as a pair of shiny new running shoes – it’s lovely to have, and sometimes it helps longer-term, but it’s mainly the rest, the fuel, and the training along the way – which all adds up in the end.

“Our ISA millionaires’ portfolios are being powered by investment trusts. Top holdings are also dominated by FTSE 100 blue chips, particularly oil, pharmaceuticals, banks and telecoms  – holdings that could help ISA millionaires in the race against inflation.

“While it’s inspiring to look at how the very wealthiest have got there, investors need to think about their own risk profiles. Investment trusts, for example, often tend to outperform funds in a rising market due to structural advantages such as the ability to gear. But in a falling market, these features can also enhance losses. And key to building up those ISA pots is to fully utilise the very generous £20,000 annual ISA allowance, something that only the very fortunate are able to do.

“Accumulating £1 million in your ISA pot is a long-term game. And even if the one million figure may seem daunting – we can all learn from the UK’s wealthiest savers to help our own investment pots grow.”

When do ISA millionaires invest?

It seems that ISA millionaires are as likely to be early birds as they are to join the last-minute ISA rush. Some 47% of total 12-month subscriptions from ii ISA millionaires were added between 6 and 30 April. When we look across all ii ISAs, 28% of the total 12-month subscriptions have been deposited between 6 and 30 April.

ISA millionaires made 27 trades a year, on average. By comparison, the average trades a year across all ISAs on ii was 8.

ii’s ISA millionaire’s top picks

Once again investment trusts feature strongly amongst ISA millionaire’s top 10 holdings, with Alliance Trust (LSE:ATST) most held, followed by Scottish Mortgage (LSE:SMT) trust. Both were in the top two ISA millionaire holdings the year before. The third most-popular holding is Shell (LSE:SHEL).

Popular big FTSE 100 blue-chip names continue to come back into favour thanks to attractive valuations, also feature heavily. These blue-chip companies also traditionally pay dividends.

Top 10 held instruments – ranked by number of customer holdings

Geographical breakdown

Within direct equity allocation, there is a clear home bias. ISA millionaires have 88% exposure to the UK – a trend across broader ii ISA savers, as well, which have an average of 86% exposure to the UK. ISA millionaires have a little less in the US versus ii’s wider customer ISA base (11% versus 12%).

How long will it take to become an ISA millionaire?

The amount of time it takes to become an ISA millionaire will vary, and ultimately this will depend on the amount you can invest, as well as your investment return.

Were you to start now and invest the full £20,000 annual ISA allowance (assuming it stays the same), and your investment saw 5% annual growth (not easy, and definitely not guaranteed) excluding fees, it would take 25 years to reach the £1million mark - £1,002,269.08, to be exact.

If your investments grew by 7% net of fees (an even taller order), you could trim three years off that period, achieving £1,048,722.82 in 22 years.

But if your investment experienced annual growth of 3%, it would take 31 years to reach the seven-figure sum (£1,030,055.17).

Gender breakdown

Some 67% of ii’s ISA millionaires are male, and 33% female, broadly in line with ii’s wider customer base (65% male and 35% female).

Overall, across its entire customer base, interactive investor now has 120,000 female customers – that’s bigger than some entire platforms.Female ISA millionaires have more in investment trusts then men (49% versus 44%), and less in direct equities (33.5% versus 42% for men).

Average ii ISA millionaire asset split (female)

Asset

ISA

Millionaires

Cash

5.0%

Equities

33.5%

Funds

8.8%

ETP

3.6%

Investment trusts

48.6%

Other

0.5%

Average ii ISA millionaire asset split (male)

Asset

ISA

Millionaires

Cash

4.6%

Equities

41.7%

Funds

6.8%

ETP

2.9%

Investment trusts

43.8%

Other

0.3%

Notes to editors

*ii’s ISA millionaire data in 2021 was based on data at 31 January 2021 and did not include Share Centre customers, who were migrated on to the ii platform in early February. In February 2021, ii migrated 61,000 customers from The Share Centre on to the ii platform. In March 2021, ii announced the acquisition of the EQi D2C business from Equiniti Group Plc and 59,000 customers were successfully migrated to the ii platform in June 2021.

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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.