Best investment trusts to have in an ISA
By Cherry Reynard, freelance journalist
8 Feb, 2024
What to put in an ISA?! We asked Gavin Haynes, Investment Consultant and Co-Founder at Fairview Investing, to tell us his top investment trust picks to help those feeling overwhelmed by choice about what to invest in with their ISA account this year.
Why should you buy investment trusts with an ISA?
The big selling point of an ISA is that it shelters any income and capital growth when you invest from the taxman. The more income and capital growth you can generate, the more you can tuck away. This saves you from having to worry about filing tax returns which you might have to do with a General Investment Account - which doesn’t have the same tax-shielded luxury - and ultimately lets you keep more of your money in your pocket.
Investment trusts can be a good investment for generating both income and capital growth, and are worth considering putting in your ISA before the end of the tax year. They’re already a deservedly popular choice for those who like an income from their investments, thanks to their unique ability to reserve income in buoyant times to pay it out in tougher times. This can help deliver a smooth and consistent income stream to investors.
The Association of Investment Companies (AIC) puts together a list of ‘Dividend Heroes’ each year – investment trusts that have grown their dividends for 20 consecutive years or more. These are worth a look if you’re in search of reliable income generators to add to your portfolio. You can see the full list of Dividend Heroes and read more about each one on the AIC website.
But investment trusts don’t stop there either; they also have a good story on capital growth - the appreciation of the value of an investment over time. The reason for this is because investment trusts can trade at a discount to the value of their underlying holdings (less than the sum the price of all the individual investments). If you buy a trust at a significant discount and it goes on to perform well, you are getting that good performance for less money than if you had bought all the same underlying holdings yourself.
Today, investment trust discounts are wide by historic standards, particularly in some unloved regions such as the UK. With all this in mind, we asked Gavin Haynes to give us his top investment trust picks for your ISA in 2024. Let's get to it.
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