It has been almost 10 years since the Stocks and Shares ISA allowance was bumped up to £20,000 a year. So I thought it appropriate to look back and see what return someone would have today if they had invested £20k back then.
Would they have doubled their money by now?
The investments
Rather than cherry-pick stocks that have done really well, I’m going to assume that this person invested their cash in index tracker funds. These are funds that passively track the stock market.
Whether they know it or not, people who only buy index funds are following John Bogle’s famous dictum: “Don’t look for the needle in the haystack. Just buy the haystack!” Bogle was the father of index funds.
In the UK, three popular indexes to invest in are:
- FTSE 100 — the biggest 100 businesses listed on the London Stock Exchange.
- S&P 500 — the leading 500 companies listed on the US stock market.
- FTSE Global All Cap — tracks thousands of companies across developed and emerging markets worldwide.
This is a powerful trio, in my opinion. It gives exposure to FTSE 100 blue-chips like HSBC, Rolls-Royce and AstraZeneca, as well as Big Tech firms across the pond (Amazon, Microsoft, Apple, etc).
Due to the size of the US stock market, we see those same tech giants dominating global indices. Yet they also have top-notch Asian firms like Taiwan Semiconductor Manufacturing, Samsung Electronics and SK Hynix.
The FTSE 250 was popular a decade ago. This is the index housing the 101st to 350th largest companies on the London Stock Exchange, including J D Wetherspoon and Greggs.
What’s the return?
For simplicity’s sake, I’m going to assume that the investor split their cash evenly into these four indices. I’m also assuming that they chose funds that reinvested dividends (known as accumulation).
Below are the approximate total returns since April 2017:
| Total return | |
| S&P 500 | 245% |
| Global index | 168% |
| FTSE 100 | 105% |
| FTSE 250 | 58% |
I calculate that the £20,000 ISA would now be worth just under £49,000 (excluding platforms fees). That’s a cracking inflation-busting return.
The next 10 years
Of course, there’s no guarantee that the next decade will be as fruitful. But I do think one megatrend worth considering investing in is humanoid robots (or physical AI).
This market’s tipped to reach around $9trn by 2050, with Morgan Stanley estimating nearly 1bn humanoid robots by then. That’s why I’ve been buying the Kraneshares Global Humanoid Robotics ETF (LSE:KOIB).
What I like about this ETF is that it’s a picks and shovels play. In other words, it provides broad exposure to the ecosystem, from humanoid robot makers like Unitree Robotics and Tesla to firms making the ‘brain’ (semiconductors), the ‘body’ (mechanical systems, sensing and perception), and other key components.
However, one risk I’m aware of is significant exposure to China. While it’s expected to dominate this global market, as it does in drones and EVs, there’s a chance that Beijing cracks down on tech firms again at some point.
So there’s political risk. On the other hand, China sees this emerging industry as crucial and is very supportive of it.
This humanoid robot theme reminds me of cybersecurity or semiconductors a decade ago — both have done tremendously well since. I think this ETF’s well worth checking out at £20 per share.
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Ben McPoland owns shares in HSBC, Kraneshares Global Humanoid Robotics ETF, Rolls-Royce, and Taiwan Semiconductor Manufacturing.
This story originally appeared on Motley Fool
