The Stocks and Shares ISA deadline is less than a month away. Each year, investors are allowed to put a certain amount, currently £20k, in an ISA. Yet if this contribution room isn’t fully utilised during the April-to-April time frame, it is lost. Even though I’m not close to finishing my £20k for this year, I do have some spare cash that I’m thinking about putting to work before deadline day.
Of course, the deadline is for putting funds into an ISA, not for investing, but I’d rather get my money working for as quickly as possible.
A key cog
The first idea I’m looking at is the London Stock Exchange Group (LSE:LSEG). The stock is up 15% over the past year.
Some might wonder how the stock exchange actually makes money. The reality is that it has various different revenue streams. Following its acquisition of Refinitiv in 2021, the firm has become a major provider of financial market data and analytics. Users can pay for access to this data. It operates various trading platforms, including the London Stock Exchange, facilitating the buying and selling of stocks, bonds, and other products. It generates fees from this market activity. There are other less important income streams too.
I think the stock could outperform based on higher transactional activity going forward. In the latest results, revenue increased by 7.7% versus the previous year. The largest percentage increase at a divisional level was capital markets (up 17.8%). This is where the fees from all the stock buying and selling goes.
With higher volatility expected this year, I think revenue is only going to increase as people are more active in trading and investing.
One risk is that more and more companies are conducting IPOs in America, even the ones that are based in the UK. Losing out on this business could hamper London Stock Exchange Group’s long-term growth potential.
A well-respected fund
Another idea is Pershing Square Holdings (LSE:PSH). Pershing Square Capital Management, the hedge fund founded by billionaire investor Bill Ackman, manages the investment trust.
In the last year, the share price is down a modest 3%. The long-term performance is strong, up 180% over the past five years. Ackman is known for making large purchases in companies he believes in. At any one time, he typically only has about a dozen stocks in the portfolio.
Given the sharp rise in volatility over the past month, I think there’s a lot to be said for trusting experienced money managers like Ackman right now. Concerns around President Trump’s tariffs, ramping up defence spending in the EU, and other factors mean that investors need to pick stocks very carefully. Given Ackman’s track record over several decades, I’d be happy to allocate some of my money to this trust.
Of course, the risk here is that Ackman and his team make the wrong calls. This has happened in the past, notably with Herbalife in 2019. Although exact figures can’t be found, the loss was reportedly close to £800m!
I’m strongly considering adding these two ideas to my ISA in the coming weeks ahead of the early April deadline.
