If you want to open a junior stocks and shares ISA for your child, which one could give the best return? Find out which junior ISAs have performed well and how to invest.
The best stocks and shares junior ISAs – who’s at the top of the table
Junior stocks and shares ISAs can invest in a huge range of funds. And this is part of the problem. Although it can be great to have choice, if you have a lot of choice, it can be quite baffling. So lots of parents don’t open a stocks and shares junior ISA because they don’t know where to start. That’s why I’ve compiled a list of the best-selling junior stocks and shares ISAs and have asked financial data company Morningstar to work out how they’ve performed since junior ISAs were launched five years ago. I’ve looked at the ten top selling junior stocks and shares ISA funds and have ranked from the most popular using data from five investment platforms. This research was carried out in October 2016.
SAVVY TIP: There are 11 funds in the list because one, the CF Woodford Equity Income fund, has only been going since June 2014. Incidentally, it’s the best selling junior stocks and shares ISA fund by some way.
Here’s how the 11 best selling stocks and shares junior ISA funds have performed between 1st November 2011 (when junior ISAs were launched) and 14th October 2016, unless otherwise stated. These performance figures are courtesy of Morningstar (figures on the HL fund are from Hargreaves Lansdown). These figures are all after charges have been deducted:
- Fundsmith Equity – 169.67% (2nd most popular fund). More info via its website.
- Lindsell Train Global Equity – 148.59% (8th most popular fund). More info via its website.
- Marlborough UK Micro Cap Growth -121.66% (4th most popular fund). More info via its website.
- Rathbone Global Opportunities – 105.21% (7th most popular fund). More info via its website.
- Liontrust Special Situations Fund – 103.75% (3rd most popular fund). More info via its website.
- Jupiter Global Managed Fund – 85.20% (equal 10th most popular fund). More info via its website.
SAVVY TIP: Since 2015, Jupiter has no longer offered a Junior ISA.
- HL Multi Manager Income and Growth Trust – 73.48% (equal 10th most popular fund). More info via its website.
- CF Woodford Equity Income – 30.8% (most popular fund – figures from fund launch 20.06.14). More info via its website.
- Invesco Perpetual High Income – 75.33% (5th most popular fund). More info via its website.
- Aberdeen Foundation Growth Fund – 53.77% (9th most popular fund). More info via its website.
- Tilney Bestinvest Growth Portfolio – 50.46% (6th most popular fund). More info via its website.
Note: The Aberdeen Foundation Growth Fund was launched in May 2012 but a fund with a different share class was established before then, so Morningstar has tracked performance back to 1st November 2011 using this fund.
Q. Does this mean these funds will continue to perform well?
A. No, I’m afraid to say it’s not necessarily that simple. Financial companies tend to use a disclaimer saying that past performance isn’t a guide to future returns and that’s because a fund manager or fund that does well one year can do very badly the next. However, it is often the case that a fund that does badly over a period of a few years is likely to continue to do badly.
SAVVY TIP: If you do pick a fund that has delivered a reasonable/good return over the last five years, don’t assume it will continue to do this. Make sure you understand what it’s invested in, and don’t just buy into it on the basis of how it’s performed.
Keep an eye on things such as:
- whether there are changes to the way the fund is managed,
- whether there are changes to charges (an increase could affect the return), and
- whether there are changed to the person or team managing it. For example, Neil Woodford used to manage a range of funds at Invesco Perpetual, including its High Income fund. He then left and in 2014 launched his own fund. Other fund managers without such a high profile have also left the funds they were managing.
Q. How do I buy a stocks and shares junior ISA?
A. You can take out a stocks and shares junior ISA direct with certain providers, or you can invest via a platform (such as one of the ones I’ve mentioned above – but there are plenty of others).
SAVVY TIP: Some investment platforms let you open ready made junior ISAs, which may be a mix of funds or one managed by their own fund management business (or one operated by a sister company).
Q. How do these compare with junior cash ISAs?
A. I’ve looked at the best buy junior cash ISAs, and the best buy account would be worth around 20% more today than on November 1st 2011 – significantly less than the worst of the top ten performing junior stocks and shares ISA funds. That’s not to say that you couldn’t have lost money if you’d invested your junior stocks and shares ISA money in the ‘wrong’ fund.
However, if you’d picked one of the best sellers, your child would be significantly better off than if you’d picked one of the best buy cash junior ISAS.
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