Quarter of ii ISA millionaires max out allowance at start of new tax year

by Myron Jobson from interactive investor |

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Among all ISA customers, four of the top 10 fund bestsellers are funds from the Vanguard stable.

  • Among all ISA customers, four of the top 10 fund bestsellers are funds from the Vanguard stable.

With the new tax year entering its third week, the benefits of ‘early bird’ investing appears to have resonated with ISA millionaires on interactive investor, the UK’s second-largest direct-to-consumer investment platform.

Some 28% of ii ISA millionaires have maxed out the annual ISA allowance (£20,000 at present) since 6 April 2021 – far outstripping the figure for the last month of the preceding tax year (10%).

However, among the average ISA investor on ii, only 5% have fully used the ISA allowance, compared to 20% between 6 March and 5 April 2021.

Myron Jobson, Personal Finance Campaigner, interactive investor says: “Not everyone will be fortunate enough to be able to max out the ISA allowance – let alone off the bat. But if you have cash to invest, your money will be in the market longer when it is put to work at the start of the tax year - and if the market is on your side, you can benefit from a whole year of compounding returns. This year, even more ISA millionaires have maxed out their ISA allowance already, with tax efficiency clearly high on the agenda.

“Whether the early bird argument will hold true this tax year remains to be seen. Attempting to time the market is a fool’s errand, but simply holding all your cash on deposit certainly won't reward you because of ultra-low interest rates. History has shown that it pays to invest the ISA allowance straight away over the long term.

“Nervous investors, or those who simply can’t afford to make a lump sum investment, could benefit from regular investing by drip feeding their investments monthly to help smooth out the inevitable bumps in the market, buying fewer shares when prices are high and more when prices are low – a process known as pound-cost averaging.”

Bestselling investments across all ii ISA customers

It is early days, but Baillie Gifford’s dominance on ii’s top 10 bestselling funds list has waned since the start of the tax year in the wake of a resurgence in demand for passive funds from the Vanguard stable – accounting for four of the top 10.

Of these, Vanguard LifeStrategy 80% Equity ranks highest in second position, behind Fundsmith Equity at the helm. Baillie Gifford American (third position) is one of three funds managed by the Scotland-based asset manager on the list.

However, when it comes to investment trusts, Baillie Gifford accounts for four out of the top 10: Scottish Mortgage (LSE:SMT) in first position; Edinburgh Worldwide (LSE:EWI) in third; Monks (LSE:MNKS) in fifth and Baillie Gifford US Growth (LSE:USA) trust in seventh.

City of London (LSE:CTY) (second place) is the sole UK-focused investment trust on the list.

There are two cryptocurrency related stocks on the equities bestsellers list over the new tax year to date: Argo Blockchain (LSE:ARB) in first place and Coinbase (NASDAQ:COIN), which went public last week, in ninth position.

GlaxoSmithKline (LSE:GSK), Lloyds Banking Group (LSE:LLOY) and Rolls-Royce (LSE:RR.) complete the top five.

Myron Jobson says: “Our ISA investors have put money into funds and trusts from well-known names the start of the tax year, and for equities investors there are a few racy investments which tap into the cryptocurrency theme.

“Argo Blockchain and, more recently, Coinbase have emerged as way for mainstream investors to gain exposure to the cryptocurrency universe - boasting bitcoin, Ethereum and other ‘coins’ that have generated stellar performance in recent history - without having direct exposure to cryptoassets. Cryptocurrencies, and those involved in the space, remain highly speculative and should only be a tiny portion of a portfolio – whatever your risk appetite is.”

Bestselling ISA investments on interactive investor between 6 April and 19 April 2021 (all customers)

Position Fund Investment trust EQUITY
1 FUNDSMITH EQUITY SCOTTISH MORTGAGE ARGO BLOCKCHAIN 
2 VANGUARD LIFESTRATEGY 80% EQUITY CITY OF LONDON  GLAXOSMITHKLINE
3 BAILLIE GIFFORD AMERICAN EDINBURGH WORLDWIDE LLOYDS BANKING GP
4 VANGUARD LIFESTRATEGY 60% EQUITY BLACKROCK WORLD MINING TRUST BP
5 BAILLIE GIFFORD POSITIVE CHANGE MONKS ROLLS ROYCE HOLDINGS 
6 VANGUARD US EQUITY ALLIANZ TECHNOLOGY LEGAL & GENERAL GP
7 BAILLIE GIFFORD GLOBAL DISCOVERY BAILLIE GIFFORD US GROWTH TRUST TESCO
8 VANGUARD LIFESTRATEGY 100% EQUITY FIDELITY CHINA SPECIAL SITUATIONS  INTL CONS AIRLINE
9 MARLBOROUGH NANO CAP GROWTH SMITHSON COINBASE 
10 ARTEMIS US SMALLER COMPANIES WORLDWIDE HEALTHCARE UK OIL & GAS PLC

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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.

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