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3 investment trusts for a Stocks and Shares ISA

We look at three investment trusts investors could consider for this year’s ISA allowance.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Investing in these investment trusts isn’t right for everyone. You should only invest if the trust’s objectives are aligned with your own, and there’s a specific need for the type of investment being made.

Closed-ended funds can trade at a discount or premium to the net asset value (NAV).

You should understand the specific risks of a trust before investing, and make sure any new investment forms part of a diversified portfolio.

Find out more about investment trusts

A Stocks and Shares ISA is one of the best ways to grow your wealth over the long term.

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, and thank yourself later.

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

Find out more about the HL Stocks and Shares ISA including charges

If you decide to shelter your money from tax in an ISA, the next decision is how to invest this year’s allowance. One way to invest is to use investment trusts.

In this article, we look at three investment trusts that each have different objectives and could be considered for a variety of Stocks and Shares ISA portfolios.

These ideas should be thought of as potential building blocks for portfolios invested for the long term. By long term, we mean at least five years.

All the investment trusts below can use gearing (borrowing to invest), which can add risk.

This article isn’t personal advice or a recommendation to invest. Remember all investments and any income they produce can fall as well as rise in value – you could get back less than you invest. Tax rules can change, and the benefits highlighted will depend on individual circumstances. If you’re not sure an investment is right for you, please seek advice.

Personal Assets Trust

Personal Assets Trust is managed by Sebastian Lyon, founder of Troy Asset Management. Lyon follows the Troy investment process for this mixed-asset investment trust, which is focused on trying to grow wealth over the long term, while limiting losses when markets fall.

He invests in quality companies, mainly based in developed markets like the US and UK. These are blended with bonds, cash and gold, which could offer some important ballast to a portfolio when the stock market isn’t doing so well. Typically, while the trust has grown over time, we expect it to lag a market rally and offer some shelter in a downturn. As with any investment, this is not guaranteed.

The trust has the flexibility to use gearing (borrowing to invest), but hasn’t at any point as the manager believes it goes against the core principle of sheltering assets.

Find out more about Personal Assets Trust including charges

Personal Assets Trust Key Investor Information

City of London Investment Trust

This trust is known as one of the Association of Investment Companies (AIC) Dividend Heroes – it’s managed to grow its dividend for more than 50 years. Whilst manager Job Curtis hasn’t been managing the trust for quite that long, he does boast a long track record. He’s managed the trust since July 1991.

The trust focuses on UK equity income – specifically looking for UK companies with the ability to grow earnings and pay dividends to their investors. Curtis favours quality, well-managed companies, chosen because he believes they’ll regularly add to the trust’s income pay-out.

Though income, like returns, isn’t guaranteed and past performance is not a guide to the future.

Curtis looks for companies that make plenty of cash, and are conservatively run, in his view. This trust could be considered for a portfolio looking for income, or to add investment to UK companies.

Find out more about City of London Investment Trust including charges

City of London Investment Trust Key Investor Information

F&C Investment Trust

This global equity investment trust is run by Paul Niven, head of BMO’s Multi-Asset Portfolio Management. It aims to deliver long-term growth by investing in companies from around the world.

Just over half the trust invests in US companies. The rest is a mix of developed markets like Europe, the UK and Japan. It also invests in emerging markets and smaller companies that could help the trust grow over the long term, but are higher risk. The trust could be used to add international investments to a UK-focused portfolio.

Around 17% of the trust invests in tech, with well-known names like Amazon, Microsoft and Alphabet (owner of Google) sitting within the top 10 investments. But there’s a large number of companies in the trust, in sectors like consumer companies and financial services too.

A modest investment in private companies could also boost growth potential and offer different returns to the stock market, as long as investors understand the risks. The trust can use derivatives which can also add risk.

Find out more about F&C Investment Trust including charges

F&C Investment Trust Key Investor Information

The HL Stocks and Shares ISA

Shelter up to £20,000 this tax year with the UK's No. 1 platform for private investors.

  • Save tax – grow your money free of UK income and capital gains tax.
  • Trust in our promise – if you’re not 100% satisfied with our service in your first 12 months, close your account and let us know. We’ll then refund our annual account charge – no questions asked. Terms apply.
  • Check in anytime – manage your ISA online or with the HL app.
  • Invest for your future – choose your own investments, pick from our ready-made options, or pay a financial adviser to choose investments for you.

You don’t need to decide where to invest straight away. You can secure your ISA allowance with cash now and decide when and where to invest when you’re ready.

As long as you add money by midnight on 5 April, it will count towards this year’s allowance.

More about the HL Stocks and Shares ISA

Open or top up an ISA

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Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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