Launched in November 2011 – two years into what was to become the longest bull market in history - Junior ISAs turn nine years old this month.
And anyone taking the plunge at that time and investing money on behalf of their child, grandchild, niece or nephew, within the tax-efficient wrapper, would have been handsomely rewarded: 14 of the 17 equity sectors have more than doubled your money, even after the stock market falls earlier this year.
The worst performing equity sector over the nine year period has been the IA UK Equity Income, with the average fund returning 56.6%* and potentially turning a £3,600 contribution (the maximum allowed when Junior ISAs launched) into £5,636.62. The other two laggards were IA Global Emerging Markets (66.7%*) and IA UK All Companies (70.9%*).
The best performing sectors were concentrated in the US. The IA Technology and Telecommunications sector was top, with the average fund in the peer group returning 352.9%* and turning that £3,600 into a pot of money worth £16,305.33. Second was IA North America (238.3%*) and third was IA North American Smaller Companies (232.9%*).
|Rank||IA Sector||% performance*||Value of £3,600 initial investment today*|
|1||Technology & Telecommunications||352.9%||£16,305.33|
|3||North American Smaller Companies||232.9%||£11,985.00|
|4||Japanese Smaller Companies||231.8%||£11,946.16|
|6||European Smaller Companies||165.1%||£9,542.95|
|7||Asia Pacific including Japan||154.4%||£9,157.34|
|8||UK Smaller Companies||153.9%||£9,141.69|
When it comes to individual funds, Baillie Gifford dominates the top performers, with three funds in the top 15. Two funds from AXA, Polar Capital and T. Rowe Price also feature.
Sitting proudly in the top spot is Baillie Gifford American, which has returned 723.4%* over the past nine years, turning £3,600 into a staggering £29,641.84 – enough for a deposit on a first home or to pay off three years of university fees.
Second is Legg Mason IF Japan Equity, which returned 622.8%* and third is Polar capital Global Technology, which returned 579.6%*.
|Rank||Fund name||% performance*||Value of £3,600 initial investment today*|
|1||Baillie Gifford American||723.4%||£29,641.84|
|2||Legg Mason IF Japan Equity||622.8%||£26,021.63|
|3||Polar Capital Global Technology||579.6%||£24,467.19|
|4||Baillie Gifford Global Discovery||530.8%||£22,707.55|
|5||Morgan Stanley US Advantage||522.6%||£22,412.86|
|6||Fidelity Global Technology||503.0%||£21,707.52|
|7||AXA Framlington Global Technology||468.9%||£20,479.21|
|8||L&G Global Technology Index Trust||468.4%||£20,463.16|
|9||Baillie Gifford Japanese Smaller Companies||454.1%||£19,945.69|
|10||GAM Star Disruptive Growth||449.0%||£19,765.13|
|11||T. Rowe Price US Large Cap Growth Equity||447.5%||£19,708.36|
|12||AXA Framlington Biotech||440.3%||£19,452.25|
|13||T. Rowe Price US Blue Chip Equity||430.1%||£19,082.88|
|14||Janus Henderson Global Technology Leaders||426.3%||£18,945.51|
|15||Polar Capital Healthcare Opportunities||423.0%||£18,827.25|
Darius McDermott, managing director of Chelsea Financial Services, commented: “Junior ISAs are a great tax-efficient wrapper for anyone wanting to invest money on behalf of a child.
“Not only do they shelter income and capital gains from the tax man, but choice of funds and investments available to use within them is phenomenal.
“It’s now possible to save up to £9,000 a year into a Junior ISA, which is a significant amount of money. But the beauty of investing for children is that time is on their side and even small, regular contributions over 18 years can make a huge difference to their financial futures.
“If you chose to invest in some of these top-performing funds almost a decade ago, the pot of money will now be worth a great deal. But it is still heartening that a one-off investment in most equity sectors would have more than doubled your money. Even the average fund in the worst performing sectors have turned £3,600 into more than £5,000 - an amount most young adults would be more than grateful to receive.”
Find out more about Junior ISAs here.
*Source: FE Analytics, all funds available on the Aegon platform, total returns in sterling, 1 November 2011 to 29 October 2020
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and do not constitute financial advice.