As the 2025/26 tax year begins, many investors may be considering some new options for their Stocks and Shares ISA.
Investment trusts, particularly those listed on the FTSE 100, offer an attractive combination of diversification, active management and long-term growth potential. They have the added benefit of tax-free gains within an ISA wrapper. That means they can be effective for building wealth over time.
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.
Unlike open-ended funds, investment trusts are closed-ended, meaning they have a fixed number of shares. This structure allows managers to take a longer-term view without the pressure of daily redemptions. Many UK trusts trade at a discount to net asset value (NAV), which can be attractive for value-focused investors.
Here are three FTSE 100 trusts that I think are options to consider for an ISA this year.
Polar Capital Technology
Polar Capital Technology Trust (LSE: PCT) is the smallest stock on the FTSE 100. It has a market cap of ‘only’ £3bn. In fact, it’s smaller than the four largest companies on the FTSE 250. That means it could be replaced in the next reshuffle. But for now, it holds its place in the country’s main index.
The trust specialises in global technology stocks, providing exposure to a high-growth sector that continues to shape the modern economy. While based in the UK, it predominantly invests in US tech giants such as Apple, Microsoft, and Nvidia, as well as emerging innovators across Asia and Europe.
However, the tech sector is inherently volatile, often subject to regulatory scrutiny and wild price swings. Valuations can be stretched, leaving it vulnerable during market corrections or interest rate hikes. In addition, a lack of diversification can add risk during periods of tech underperformance.
Scottish Mortgage
Scottish Mortgage Investment Trust (LSE: SMT) is one of the best-known investment trusts in the UK. It has backed disruptive global companies early in their growth journeys, including Amazon, ASML, and private firms such as SpaceX and Stripe.
But the focus on disruptive and early-stage businesses can lead to volatility or long periods of weak performance. With a significant allocation to unlisted companies, liquidity and accurate valuations can be a problem.
The trust has experienced a challenging few years due to a rotation away from growth stocks. But its long-term investment goals remain a key strength. The managers tend to have a contrarian ‘higher-risk, higher-reward’ approach. Yet it seems to work, with many decades of good performance in the past.
Pershing Square
Pershing Square Holdings (LSE: PSH) is a concentrated, high-conviction trust that is managed by renowned investor Bill Ackman. It focuses on large-cap North American companies such as Chipotle Mexican Grill, Hilton and Universal Music Group.
What sets it apart is its activist investment style and a disciplined approach to capital allocation. The trust has a strong record of delivering returns through both fundamental stock selection and strategic hedging.
However, as it holds fewer than a dozen positions, poor performance in one or two key holdings could have a big impact on overall returns. Plus, while activist strategies can be potentially lucrative, they’re unpredictable and may not always deliver the desired results.
Still, with years of consistent performance, it’s likely to appeal to UK investors looking for currency diversification and exposure to established US businesses.
This post was originally published on Motley Fool
