What UK shares do ISA millionaires buy?

What are the best UK shares? Maybe we should ask the ‘ISA millionaires’?

I’d never heard this phrase – ISA millionaire – until recently. But now there are thousands of them. 

To be accurate, a Freedom of Information request showed 4,000 UK citizens have now swollen their ISAs past the £1m mark, with an average holding of £1.4m. 

ISAs have only been around for a few years and have strict deposit limits, so these millionaires must have grown their wealth rather than chucking in any existing riches. 

New report

I’d love to take a sneak peek at these million-pound portfolios to steal the secrets to getting rich. And, well, now I can. 

A new report from AJ Bell revealed the 10 most popular UK shares of ISA millionaires. Great stuff. Let’s take a look. 

One thing jumps off the screen here – lots of dividend shares. No surprises here. Our ISA millionaires can hardly be blamed for using their riches to withdraw a passive income. 

Take Legal & General. Its 8.26% dividend yield from £1.4m delivers a (tax-free!) passive income of £112,840 straight to the owner’s ISA. 

These millionaires would hope for those £100k plus in dividends to rise as years go by too. Cripes.  

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Well, good on them for getting there, but I’m a little short of a cool million so I’ll discard the mammoth dividend businesses and focus on the promising growth stocks. 

In this case, I’m going to throw out anything with a 5% yield. Now we’re left with GSK, Haleon, and Scottish Mortgage Investment Trust. 

GSK and Haleon (spun off from GSK) are a surprise to me. These pharma firms haven’t been great buys and I’m not interested in buying the shares today. 

But the inclusion of Scottish Mortgage (LSE: SMT)? That makes sense after a meteoric rise where shareholders could have bagged a 3,209% return. 

AJ Bell’s ISA millionaires might have a few kind words to say about the fund propelling their accounts past the seven-figure mark. 

A buy?

One reason for Scottish Mortgage’s success has been a focus on fledgling growth companies, usually in the tech sphere. The fund picked Tesla and Nvidia, to name a couple. 

The past is the past, however, so I’m more interested in whether this fund might mint the next batch of ISA millionaires. 

Well, technology has had a terrific run and there are no guarantees that will continue. 

Further, firms like Nvidia (6.5% of portfolio) and Tesla (3.4% of portfolio) are larger now and don’t look cheap.

But the portfolio is broad with ample exposure to unlisted companies. 

SpaceX (4.3% of portfolio) launched more orbitals last year than any other entity – even the US or Chinese governments – and has bags of potential. 

Cheap fees

Other holdings include the ‘Latin American Amazon’ of Mercadolibre and Tiktok-owner Bytedance. These foreign companies aren’t simple to research otherwise. 

Fees are reasonable too. While some funds charge 2% and call it good value, Scottish Mortgage charges a bargain-sounding 0.34%. 

Will the shares make me a millionaire? I don’t know, but I don’t plan to die wondering. I’m happy to hold the shares I have.

This post was originally published on Motley Fool