The FTSE 100 is up almost 50% over the past five years. On the face of it, that’s a very respectable rate of return. When it comes to long-term investing, stacking up consistent years’ worth of gains is the dream. Yet other growth shares outside tracker funds have done even better. Let’s dive in.
ISA benefits
Any of the growth stocks mentioned could be best bought via a Stocks and Shares ISA. The benefit of housing the portfolio here is that when dividends arrive or the stocks are sold, an investor doesn’t have to pay any tax. If we’re talking about growth stocks that have significantly increased in value, this tax saving could amount to a lot of money.
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I know that we’re talking about past performance here when considering the last five years. However, these are stocks with clear momentum. It’s very plausible that the share price rally could continue in the coming years, banking further profits for active investors. However, past performance alone isn’t a guarantee of the future, and this should be noted.
Strong historical gains
The JP Morgan American Investment Trust is up 80% over the past five years. It focuses on buying and selling US stocks to try to outperform the S&P 500. The largest holdings currently include the likes of Nvidia, Alphabet, and Microsoft. I like the trust because it can provide easy exposure to the US market, diversifying a UK-heavy ISA. Further, given that most AI leaders and big tech companies are listed in America, I think growth in these sectors in the coming years should further lift trust.
Another share is JTC, a specialist outsourced services firm for finance companies. The stock is up 121% in the last five years, as regulations have become tighter, along with a boom in private equity companies. The business has been growing for several years with double-digit organic growth. I think this can continue as it scales internationally and cross-sells other services to existing clients.
A risk for both companies is a broader economic slowdown. This would likely reduce the American Investment Trust as tech stocks take a hit. For JTC, it could see clients cut back on the amount of business being outsourced, as cost-cutting starts to be felt.
Banking on it
Investec (LSE:INVP) is another good example, with the stock up 184% in the period mentioned. The firm has done well in recent years because it’s not just a regular ‘vanilla’ bank. The group has exposure to specialist banking, wealth management, and asset management, giving it multiple avenues for growth. The latest trading update for March showed core loans rose by 7.4% and deposits by 5.7%, both versus last year. These are good metrics to show higher customer demand.
I think it could keep doing well if higher-value advisory and wealth operations continue to expand. That said, one risk is growing competition in the wealth space. Other banks are realising this is an area of growth, so Investec’s market share could be eroded depending on how well it retains clients. Overall, I think all three stocks could be considered for future gains within an ISA.
