Best Stocks & Shares ISAs

We go over the top-performing stocks & shares ISAs.

Updated: June 14, 2024
Matt Crabtree

Written By

Matt Crabtree

|
Rebecca Goodman

Edited By

Rebecca Goodman

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Price is what you pay. Value is what you get.

Warren Buffett (Source)

A variety of tax-free options exist for British savers and investors thanks to financial instruments known as individual savings accounts (ISAs).

Investors can open a stocks and shares ISA and invest in the stock market in a variety of different ways. This could be via direct ownership of stocks in firms or through the purchase of shares in pooled investment vehicles like funds.

With a stocks and shares ISA you'll be able to benefit from certain tax breaks, so they're well worth considering if you don't already use them.

Here we look at everything you need to know about stocks and shares ISAs, as well as our recommendations for the best stocks and shares ISA in the UK.

ProviderScoreDetails
1. Vanguard★★★★★Learn More
2. Interactive Investor★★★★★Learn More
3. Nutmeg★★★★★Learn More
4. Freetrade★★★★Learn More
5. Wealthify★★★★Learn More
6. Moneyfarm★★★★Learn More
7. AJ Bell★★★★Learn More
8. Bestinvest★★★★Learn More
9. Hargreaves Lansdown★★★★★Learn More
10. InvestEngine★★★★★Learn More

What is a stocks & shares ISA?

The purpose of a stocks and shares ISA is to invest without paying tax on the money you generate, either through capital gains or regular income.

There is an annual limit on the amount you can put into one, of £20,000 per tax year, and this can be split among different types of ISAs (stocks and shares or cash, for example).

There are three main types of investment ISAs available: do-it-yourself (DIY), partially managed (PM), and fully managed (FM), which you'll pay more for.

Any funds from an existing ISA (such as a cash ISA) that you roll over into a stocks and shares ISA will not contribute towards your yearly ISA allowance.

However, as with any type of investment it's important to look at the risks early on. Never put money in that you can't afford to lose and always remember that returns are not guarnateed.

Before making a sizable investment in something like Ethereum, for example, you need to make sure you know what you're doing. It's a good idea to have a pot of money aside, such as an emergency reserve as the last thing you want to do is go into debt through investing money you don't have.

How to open a stocks and shares ISA

The time it takes to open a stocks and shares ISA will depend on the provider you've chosen, but usually it can happen pretty quickly.

Some services may need you to complete additional steps before investing, such as filling in a questionnaire to assess your level of risk tolerance or familiarity with the stock market.

Here are a few things to consider before opening an investment ISA:

  • Make a decision on your investment strategy. DIY or store-bought, the option is yours. There are service providers that give either option, so you may make the change when you're ready.
  • Pick a service. To invest in an ISA, you may either do it yourself via a broker or find a ready-made solution through a robo-advisor.
  • Give your personal details. You might be asked to provide an ID, a bill showing your current address, and/or your national insurance number.
  • Let the verification process finish. If your identity has been confirmed, you are free to start investing.

A number of investment providers are available for anyone interested in investing in stocks and shares using an Individual Savings Account (ISA). If you open one of these accounts, you may pick and choose which assets to include in your portfolio.

Top-performing stocks and shares ISAs

Here we'll look at a few top picks for providers offering stocks and shares ISAs.

The right choice for you wil depend on how much money you'd like to invest, where you want to invest, and also your appetite to risk. Remember — returns aren't guaranteed so don't put in anything you couldn't afford to lose. Also watch out for any fees you may have to pay, and factor these in before making an investment.

1. Vanguard — Top-performing stocks and shares ISA

Vanguard is a major participant in the investment fund industry, and it is known mostly for its low-cost index tracker funds. However, Vanguard also offers active funds.

Particularly relevant to this discussion are the LifeStrategy funds offered by Vanguard Investor. The LifeStrategy family of funds is a pre-made portfolio based on Vanguard index tracker funds, with an emphasis on US equities. A total of five distinct stock-bond combinations are available, each of which is designated by a unique name.

Now, let's take a look at Vanguard's historical yearly returns. For moderate long-term gains and manageable danger, look no further than the LifeStrategy 60% Shares fund.

The LifeStrategy 40% Equity fund was marginally less risky and returned 5.73% in 2021, although this investment still returned 9.90%. According to FE statistics, Vanguard fund performance is typically high in the mid to long term, as both portfolios rank in the top quartile relative to selected competitors over one, three, and five years.

If you invested £20,000 in an ISA on Vanguard's internal service, Vanguard Investor, you would pay a total of 0.37% in fees, including the platform fee. One of the least expensive methods to purchase Vanguard funds, if you have more than £80k to deposit, is through Interactive Investor's platform, rather than directly through Vanguard's.

2. Interactive Investor — Highly established stocks and shares ISA

A FTSE 100 fund manager (2024’s top Index funds…), Abrdn, recently purchased interactive investor and its more than 400,000 customers. General trading and junior ISA accounts are also available.

There are hefty monthly trading minimum and one free transaction per customer every month to offset the high dealing price. Investors with higher-value portfolios may choose a fixed platform charge over a proportionate one. Providers with a platform fee of 0.25% would charge more than 1% more to investors with a portfolio worth more than £50,000, by comparison.

It rewards ISA savers with interest on their cash holdings (0.40 per cent on the first £10,000 and 1.25 per cent on the remainder). Provides a ‘Super 60' list of carefully chosen funds in addition to five premade portfolios.

Although it does not give financial advice, it does provide extensive information on mutual funds and stocks. Possibility to do business digitally (online, through mobile app, or via phone). The minimum monthly contribution is £25 and there is no minimum initial investment amount. There is reliable assistance accessible, with a phone line open five days a week and a message centre. 

Overall, given the flat platform charge and the many investment options available, interactive investor may be more attractive to investors with larger portfolio values.

3. Nutmeg — Popular stocks and shares ISA

Nutmeg provides ten different model portfolios with varying degrees of risk to accommodate investors with varying comfort levels with taking on financial uncertainty.

Nutmeg asks you a collection of questions to determine your risk tolerance and then offers an investment portfolio, from “conservative” to “aggressive”, based on its assessment of your answers.

All of Nutmeg's fully managed solutions use cheap ETFs that are spread across products, nations, and sectors to ensure that your portfolio is always tailored to your specific needs and risk tolerance.

Let's pretend you choose portfolio number six, the one promising “modest growth without severe volatility”. In 2021, an investment would have yielded a return of 9.90%, which is on par with the returns offered by rivals Wealthify and Moneyfarm for a similarly diversified portfolio.

Additionally, Nutmeg offers many Socially Responsible Investment (SRI) holdings, commonly known as “ethical” or “self-sustaining” investment portfolios; the corresponding ethical portfolio earned 10.70% in 2021.

Using data from real transactions instead of averages, Nutmeg’s online money app calculates investment performance numbers starting with a £25,000 account size and displaying the results after fees. 

Nutmeg determines how its rivals perform by averaging the after-fee returns of several selected investment managers, which include UBS, Coutts, and Rathbones.

The portfolio has returned 32.3% over the last 5 years and 74.0% since Nutmeg's 2012 inception, respectively, whereas the average return for its rivals is 27.3% over the past 5 years and 63.0% since 2012. Nutmeg has outperformed its competitors on an annualised basis, producing 6.2 per cent contrasted to 5.4 per cent since its start.

When comparing Nutmeg's whole spectrum, the company's upper end performs better on average, thus it may be a smart choice for investors with more adventurous portfolios. Portfolio 10 (the most volatile) earned 19.6% in 2021, over the market average of 13.3%, and has increased by 139.4%, compared to 111.8% (or 9.9% annually), from 2012.

Fees for the fully managed holdings range from 0.35-0.75%, with those for the fixed allocation portfolios from Nutmeg ranging from 0.25% to 0.45%, depending on the amount invested.

Funds in robo holdings also have their own costs, typically approximately 0.2% (this applies to all the robo products covered in this article, not only Nutmeg).

4. Freetrade — Top-performing ISA with fixed fees

Over a million people in the United Kingdom use the services of Freetrade, a corporation that is privately held. Neither money nor stock trading fees are charged.

Investors with higher-value portfolios may choose a fixed platform charge over a proportionate one. If an investor has a portfolio worth more than £24,000, the platform cost should be less than the average 0.25% charged by most service providers.

Offers a 1% interest rate on ISA holdings (up to £2,000). Offering solely exchange-traded funds and investment trusts rather than open-end investment company funds (OEICs), and no pre-made portfolios. It does not provide investment advice and offers fewer research options than its competitors.

In any case, it serves as a thriving hub for investors to talk amongst themselves. If you're an investor interested in adding a SIPP, you'll need to switch to the more expensive Freetrade Plus plan, which costs £120 each year. With this, you may get 3% interest on balances up to £4,000 and access to VIP service.

Only the mobile app allows trading. You may start investing just £2, but there's no option to pay in instalments. There is simply email support, but our questions have always been handled quickly.

For investors seeking a low-cost supplier with a strong social trading offering, Freetrade may be a viable solution.

5. Wealthify — Best for robo-advice

Wealthify is a robo-advisor that functions in a manner similar to the majority of its peers, in that it employs an automated method to build portfolios that fit customers' risk tolerance and makes use of low-cost mutual funds and ETFs.

Client portfolios are constantly monitored and rebalanced by the firm's investment team to ensure they are consistent with each client's desired level of risk.

In the past, it took a more conservative approach than other robo-advisors by allocating less of its clients' funds to stocks than one would anticipate for a medium risk product. There are five ‘traditional' Stocks & Shares ISA portfolios and five ‘ethical' ISA portfolios to choose from.

The ‘Confident' portfolio represents an intermediate level of risk. According to Wealthify, this portfolio returned around 6.70% in 2021 after fees, whereas the equal ethical programme lead to a 2021 ROI of 7.63%. Its Ambitious program returned about 9.72% and its SRI counterpart returned around 11.18%.

Wealthify's management fee is 0.60%. There's a  “refer a friend” feature, which may reward you £50 (subject to terms and restrictions).

6. Moneyfarm — Second best for robo-advice

Among the several UK robo-advisors, the most well-known is Nutmeg, but a close second is Moneyfarm.

Nutmeg has started providing financial counselling as a separate service, which costs you £575, while Moneyfarm utilises a questionnaire to evaluate your investing expertise, risk tolerance, and investment objectives, and then offers a portfolio suited to you.

Moneyfarm utilises its own research to build an ETF portfolio, and it employs volatility targeting in its asset allocation and periodic rebalancing (every three months, on average). For Moneyfarm to continue offering you sound advice, it must annually assess your investment portfolio.

Moneyfarm began in the UK in January 2016, and an investment of £25k in their id-risk holding with a level Risk Level 6 (out of 7) would have returned 71.6% as of December 31, 2021. (which is the most recent available performance data).

Using the same portfolio in 2021 would have yielded the same return as the same portfolio offered by Nutmeg, at 13.70%. In order to manage your money, Moneyfarm charges a cost of between 0.35-0.75% annually, with a minimum price of £140 and a maximum fee of £170 a year.

7. AJ Bell — Top provider with low fees

AJ Bell has approximately 440,000 customers, making it a FTSE 250 firm. There are also trading accounts, SIPPs, Lifetime ISAs, and Junior ISAs, among others.

Despite this, fund trading costs are among the lowest in the industry at 0.25% (for portfolios under £250,000), but platform fees are higher. The platform charge for shares is limited at £42 per year, however it has one of the highest share trading fees (for infrequent traders).

Offering tiered interest rates on ISA cash holdings (0.25% up to £10,000, 0.75% over £10,000). Includes four pre-built portfolios and a list of 80 hand-picked funds labelled “Favourite Funds”. Offers financial advice as well. Extensive resources for researching stocks and mutual funds.

Possibility to do business digitally (online, through mobile app, or via phone). Investing monthly with a minimum of £25 requires a minimum of a £5 initial deposit. Live chat and a toll-free hotline are just two of the many ways to get in touch with the helpful staff here.

When compared to other major providers, AJ Bell's platform costs for funds are among the lowest, and their research offering is comprehensive.

The five-star rating for AJ Bell's stocks and share ISA suggests it offers competitive pricing when compared to other platforms for creating a portfolio.

There is a plethora of mutual funds, stocks, and shares available for investment. It has low platform costs, beginning at 0.25 per cent. Investments in excess of £500,000 are not subject to fees, and the monthly fee for shares is restricted at £3.50.

If you make more than 10 trades a month, your per-trade fee drops to £4.95. Purchases and sales of mutual funds cost £1.50. It’s something to consider during the recession.

8. Bestinvest — Low-cost, ready-made ISAs

More than 46,000 people use Bestinvest, which is controlled by wealth management company Evelyn Partners (formerly Tilney Smith & Williamson). General trading and junior ISA accounts are also available.

Financing trades at no cost and stock trades at one of the lowest rates. However, the platform charges one of the highest costs for money and there is no limit on the platform fee. Offers a 2.15 per cent interest rate on ISA balances.

It provides ‘The BestTM Funds List,' a compilation of about 120 mutual funds, exchange-traded funds, and investment trusts, and 15 pre-built portfolios. Additionally, the platform cost for Bestinvest's pre-built portfolio is lower than the industry standard (0.2% for the first £500,000 invested, and 0.1% for amounts greater than £500,000).

Find a free one-on-one consultation, as well as fixed-price packages and portfolio simulation tools as part of its advice service for investors. It also offers in-depth analysis of various investment options. You’ll have the possibility of doing business digitally (online, through mobile app, or via phone).

An initial commitment of £100 is required, or a minimum of £50 on a monthly basis. Live chat and a toll-free hotline are just two of the many ways to get in touch with the helpful staff here.

Investors seeking a low-cost ready-made portfolio and financial guidance may find Bestinvest appealing. However, its share offering is smaller than those of competing sites.

9. Hargreaves Lansdown — Best performing for premium services

With liquidity freezes, consumers have to find a way to put their money to better work. We are in the age of frugality. Over 1.7 million people have invested in Hargreaves Lansdown, making it a FTSE 100 firm. There are also trading accounts, SIPPs, Lifetime ISAs, and Junior ISAs, among others.

Fund trading is free, although the platform charge is one of the highest at 0.45% (for accounts under £250,000). The platform cost for shares is regulated at £45 per year, however, it is among the highest in the industry.

Offers a tiered interest rate of 0.40 per cent on ISA balances up to £10,000 and 0.45 per cent to 1.11 per cent on balances beyond £10,000.

Provides three pre-made portfolios and a “Wealth Shortlist” of more than 70 hand-picked investments. Provides investment advice in addition to other services. Extensive resources for researching stocks and mutual funds.

Possibility to do business digitally (online, through a mobile app, or via phone). Initial investments may be made with up to £100 all at once, or just £25 each month. Extensive assistance is offered, including a 24/7 hotline and a private chat system.

Overall, HL's outstanding investment options, research offering, and customer service suggest it might be a viable alternative for investors prepared to pay for a premium service.

10. InvestEngine — Newest best performing ISA

InvestEngine, which is privately held, debuted in 2019 and now has over 21,000 customers. There is also a general trading account and a corporate investment account available.

Exclusively provides access to Exchange Traded Funds (ETFs) and does not charge any trading or platform fees. The platform charge for pre-built portfolios is a competitive 0.25%. Does not provide ISA account holders with interest on inactive cash holdings.

Provides customers with a choice of 13 pre-built portfolios or the freedom to choose their own Exchange Traded Funds (ETFs). It does not provide financial advice and has fewer research options than competing services. The sophisticated features, including portfolio rebalancing, are, nonetheless, available.

Accepts online and mobile trading. Instead of trading ETFs at ‘live prices', clients have their orders aggregated into a single daily trade. You may invest as little as £50 a month after the first payment of £100. Only a live chat feature is accessible for support 6 days a week.

In general, InvestEngine might be a good option for those seeking a low-cost strategy for investing their ISA money in ETFs.

Our conclusion…  

There is a £20,000 ISA cap for a tax year so you can't put in more than this amoutn (spread across any ISA accounts you have). When it comes to stocks and shares ISAs, there's a lot to choose from — a self-directed ISA, a semi-managed ISA, or a fully-managed ISA, for example.

The best for you will depend on your budget, how much you're looking to invest, and also how risky you are. But whichever option you choose always keep an eye on any fees you may be charged.

Related Guides:

FAQs

How is your investment kept safe?

How much do investors have to pay in fees?

How do you start an Individual Savings Account for stocks and shares?

What’s the minimum for a stocks & and shares ISA to get started?

Can you get ISA investing advice?

Who do robo-advisor ISAs work?

What are junior ISAs?

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