In my view, a Stocks and Shares ISA represents one of the best ways to grow wealth over the long term. That’s because it offers me a way to shelter my investments from UK income and capital gains tax.
After deciding to shelter my money from tax in an ISA, my next decision is where to invest it.
One option is for me to buy an investment trust, which is a type of fund set up as a company that aims to make money for shareholders like me by investing in a portfolio of shares, property, or other assets.
Essentially, if I buy a share in an investment trust, I’m buying a slice of the trust’s underlying portfolio.
With that in mind, here’s a look at a FTSE 100 investment trust I’d happily buy for my Stock and Shares ISA if I had some spare cash lying around.
Targeting exciting growth companies
Scottish Mortgage Investment Trust (LSE:SMT) is run by asset management firm Baillie Gifford. The trust comes with an ongoing charge of 0.32% with £13.34bn total assets.
The trust aims to identify, own, and support the world’s most outstanding growth companies.
As a result, inside the trust’s top 10 holdings are firms such as Moderna, Tesla, Space Exploration Technologies, NVIDIA, and Tencent.
Altogether the trust holds 99 companies, 71.1% of which are public with the remaining 28.9% private.
The trust has investments spread across various geographies, including North America (52.5%), Europe (26.6%), and Asia (14.2%).
Potential risk factors
However, one thing I’m wary of is that exposure to overseas securities comes with an element of risk.
For starters, fluctuations in exchange rates can negatively impact the value of investments.
Moreover, by investing in emerging markets and China, difficulties with trading, liquidity, regulation, and taxation could arise.
This would inevitably result in a negative impact on the value of my potential investment.
Discounted shares for my ISA?
Thanks to the global sell-off in growth stocks, Scottish Mortgage shares have gone out of fashion of late. Since November 2021, the shares have slumped by almost 60%.
Prior to that, however, the shares had rocketed by over 190% between March 2020 and November 2021, making SMT one of the most popular trusts in the FTSE 100 index at the time.
In part because of this lacklustre performance, I think now could be an ideal opportunity for me to hoover up some Scottish Mortgage shares for my ISA at a discount.
In addition, I’m bullish when it comes to the future of growth stocks.
Light at the end of the tunnel
Because of this, I strongly believe the investment trust’s bet on growth opportunities can pay off in the long run. After all, growth stocks won’t be out of fashion forever.
With a possible return to lower interest rates on the horizon, I reckon patient Scottish Mortgage shareholders could soon be handsomely rewarded, thanks to the trust’s high risk appetite.
For these reasons, if I had the cash to spare, I’d buy some Scottish Mortgage shares for my ISA today as part of my strategy to build wealth over the long term.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
