Investing through a winter of discontent
The term “Winter of Discontent” was used in the opening line of Shakespeare’s...
No fewer than three funds managed by Baillie Gifford have made it into the top 10 performing Elite Rated funds over the past six years*.
Junior ISAs celebrate their sixth birthday on 1 November 2017, so we decided to find out which Elite Rated funds have made the biggest returns for investors over that time period.
The best-performing Elite Rated fund since 1 November 2011 is Baillie Gifford Shin Nippon, which is up 377.19%. Anyone investing £3,600** into the investment trust when the Junior ISA was first introduced, would have a pot of money worth £17,178.75* today.
‘Shin Nippon’, meaning ‘new Japan’, invests in smaller companies in the country, focusing on emerging or disrupted sectors for innovative growth opportunities. Its sister trust, Baillie Gifford Japan, which invests in small and medium-sized companies, is in second place, returning 304.89%*.
Japan has been an interesting story in recent years, with Abenomics finally seeming to kickstart the economy after a 20-30 year lull. Believe it or not, the Japanese stock market has only just got back to 1988 levels, with the Nikkei surpassing 21,000 earlier this month.
In third place over the past six years is R&M UK Equity Smaller Companies, with 280.95%* and another Baillie Gifford-run trust, Scottish Mortgage, is in fourth place (273.74%*). Scottish Mortgage is a punchy trust, investing in global companies with high growth prospects. Polar Capital Healthcare Opportunities was in fifth (268.82%*).
According to HMRC***, almost £3.45 billion has been saved or invested on behalf of more than 2.81 million children, since the Junior ISA was introduced in 2011. This makes the tax-efficient product much more successful than its predecessor, the Child Trust Fund.
However, only a third of accounts opened are in stocks and shares accounts, despite the long time horizon of the product. With savings rates so low, the money held in cash Junior ISAs is not working as hard as it could be, and those willing to forego the safety of cash for the riskier but potentially more rewarding investment option have so far been rewarded.
*Source FE Analytics, total returns in sterling from 1 November 2011 to 19 October 2017.
**The maximum subscription into a Junior ISA in 2011 was £3,600.
***Source: HMRC, August 2017. Individual savings accounts, Junior ISA annual subscriptions as reported to HMRC by providers for financial years ending 5 April.