ISA holders fill their portfolios up with funds instead of choosing their own shares

Markets are known for changing quickly, and many of us are tempted to keep up with each move. But looking at longer investment trends can help investors identify more significant patterns than the daily movements. The latest data from HMRC on ISA holders revealed that investors have spent a decade shrinking the portion of their ISA dedicated to stocks to buy up exchange-traded investments like ETFs (exchange-traded funds).

It’s important to note that HMRC releases its data on delay, so this decade encapsulates the 2014-15 tax year through the 2024-25 tax year. For this reason, we’ll focus more on the long-term trends than ones which could move significantly by the time the next tax year’s data is released.

Here’s how the money in portfolios was divided in the 2014-15 tax year versus a decade later.

Stocks make up a smaller piece of the pie

Stocks and shares ISA holders have opted to hold 5.3 percentage points less of their portfolio in individual stocks over the past decade. The overall amount held in shares has still grown by 3.3% on average each year, but this is one of the slowest growing areas held in Stocks and shares ISAs. Now, they make up an average 9.4% of all Stocks and shares ISAs.

Not all investors will feel comfortable investing in individual stocks, which might explain part of the shrinking portion. As people wade into investing for the first time, they might opt exclusively for some sort of fund that requires a less hands-on approach.

More experienced investors will also often opt to hold most investments in funds instead of individual shares, because individual shares are so much more volatile. By keeping the proportion closer to one tenth, they can use shares as a satellite holding for an extra return boost without having to suffer a large loss if a big stock allocation takes a turn for the worse.

Increased holdings in exchange-traded investments

The area with the largest proportional increase was in shares traded on a regular exchange, referring to investments like ETFs or ETNs (exchange-traded notes). These are like a standard fund in that they hold a basket of stocks, but unlike a traditional fund are traded on an exchange. Their structure can sometimes make them a cheaper option than a standard fund and can be more affordable in terms of platform cost.

The increase in exchange-traded investments has come along with a shrinking proportion of more traditional fund structures, like open-ended investment companies, which have decreased by three percentage points. However, they still account for by far the largest portion of what investors hold, at 40.7%.

• Read: Is your ISA keeping pace with your peers?

Changing environment with bonds

Another area that has shrank not only in proportion of an ISA, but in total holdings, is corporate bond funds. They are the only category of assets listed by HMRC which has fallen in value instead of grown, at about 6% each year. They’ve never been a massive portion of ISA holdings, accounting for just 4% in 2014-15, but they now make up just 1%.

One reason may be that this was a strong decade for equities. While the Investment Association global corporate bond sector grew by 40% between 6 April 2015 and 6 April 2025, the global equity sector grew by well over double that amount, at 112%. Bonds typically offer a smoother journey than equities, but the difference in those two returns may have persuaded some investors away from bonds.

Gilts, however, experienced a very different ride. They jumped in popularity as interest rates heightened after dropping to near zero after COVID.

Between the 2022-23 and 2023-24 tax year, the amount of ISA money in Gilts nearly tripled, showing investors pile into the safe haven. As interest rates have remained high in the past year, it’s likely another high gilt reading could come when the 2025-26 tax year data is released. Another reason that gilts have increased in popularity is due to capital gains tax rises. Gilts typically don’t face tax on their capital gains, which makes them a popular asset for some investors. However, there’s no need for those holding their bonds in an ISA to worry about this, because capital gains that are made inside of an ISA are protected from tax regardless of the asset.

How do your holdings match up?

This demonstrates the types of assets held across all Stocks and shares ISAs, and it may look very different to the makeup of your own. That isn’t a bad thing. People will need a different mix of assets in their ISA depending on their risk tolerance and goals. For example, it wouldn’t be uncommon for a young investor who doesn’t plan to use the money for many years to hold their portfolio completely in stocks. Older investors who are using their ISAs to supplement retirement income may opt for larger bond allocations, so they can use coupon payments for costs like bills or groceries.

However, seeing where other investors are trending can be a helpful check on your own portfolio, and ensure that you aren’t missing out on an asset class that could be a more effective, or cheaper, alternative.