What are the best UK shares? Maybe we should ask the ‘ISA millionaires’?
I’d never heard this phrase – ISA millionaire – until recently. But now there are thousands of them.
To be accurate, a Freedom of Information request showed 4,000 UK citizens have now swollen their ISAs past the £1m mark, with an average holding of £1.4m.
ISAs have only been around for a few years and have strict deposit limits, so these millionaires must have grown their wealth rather than chucking in any existing riches.
New report
I’d love to take a sneak peek at these million-pound portfolios to steal the secrets to getting rich. And, well, now I can.
A new report from AJ Bell revealed the 10 most popular UK shares of ISA millionaires. Great stuff. Let’s take a look.
| % of ISA millionaire holders | |
| Shell | 39% |
| Lloyds | 32% |
| GSK | 32% |
| BP | 31% |
| Aviva | 28% |
| National Grid | 25% |
| Haleon | 25% |
| Scottish Mortgage Investment Fund | 24% |
| Legal & General | 24% |
| HSBC | 23% |
One thing jumps off the screen here – lots of dividend shares. No surprises here. Our ISA millionaires can hardly be blamed for using their riches to withdraw a passive income.
Take Legal & General. Its 8.26% dividend yield from £1.4m delivers a (tax-free!) passive income of £112,840 straight to the owner’s ISA.
These millionaires would hope for those £100k plus in dividends to rise as years go by too. Cripes.
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Well, good on them for getting there, but I’m a little short of a cool million so I’ll discard the mammoth dividend businesses and focus on the promising growth stocks.
In this case, I’m going to throw out anything with a 5% yield. Now we’re left with GSK, Haleon, and Scottish Mortgage Investment Trust.
GSK and Haleon (spun off from GSK) are a surprise to me. These pharma firms haven’t been great buys and I’m not interested in buying the shares today.
But the inclusion of Scottish Mortgage (LSE: SMT)? That makes sense after a meteoric rise where shareholders could have bagged a 3,209% return.
AJ Bell’s ISA millionaires might have a few kind words to say about the fund propelling their accounts past the seven-figure mark.
A buy?
One reason for Scottish Mortgage’s success has been a focus on fledgling growth companies, usually in the tech sphere. The fund picked Tesla and Nvidia, to name a couple.
The past is the past, however, so I’m more interested in whether this fund might mint the next batch of ISA millionaires.
Well, technology has had a terrific run and there are no guarantees that will continue.
Further, firms like Nvidia (6.5% of portfolio) and Tesla (3.4% of portfolio) are larger now and don’t look cheap.
But the portfolio is broad with ample exposure to unlisted companies.
SpaceX (4.3% of portfolio) launched more orbitals last year than any other entity – even the US or Chinese governments – and has bags of potential.
Cheap fees
Other holdings include the ‘Latin American Amazon’ of Mercadolibre and Tiktok-owner Bytedance. These foreign companies aren’t simple to research otherwise.
Fees are reasonable too. While some funds charge 2% and call it good value, Scottish Mortgage charges a bargain-sounding 0.34%.
Will the shares make me a millionaire? I don’t know, but I don’t plan to die wondering. I’m happy to hold the shares I have.
