A stocks and shares ISA is often the starting point for long-term savings. Investments held within an ISA are sheltered from income tax and capital gains tax. This makes it a natural choice when investing for growth, investing for income, or a combination of both.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
This tax shelter is particularly important today. Capital gains tax rates are rising. In the October 2024 budget, the capital gains tax rate for profits made on stocks and shares was raised from 10% to 18% for basic rate tax payers, and 20% to 24% for higher rate tax payers1. This brings it in line with the rate for residential property. The annual allowance – the amount of profits you can make before capital gains tax is due – has also been falling in recent years. It now sits at £3,000, having been as high as £12,300 in the 2022/2023 tax year2.
Equally, while income tax rates have not risen, income tax bands are frozen. That means that as salaries rise, more people are drawn into higher rates of tax. That means more people could be paying higher rates of tax on their savings. This makes a good case for sheltering your investments in an ISA wrapper.
Stocks and Shares ISA vs Cash ISA
Investors have a choice between a stocks and shares ISA and a cash ISA. There is an overall allowance of £20,000 per year. Within a stocks and shares ISA, investors can invest in collective funds, direct equities and bonds. For long-term investors that can ride out short-term volatility, investments will usually give a higher return than cash savings and greater protection against inflation. But stock markets can be choppy, and – unlike a cash ISA - your investments can go down as well as up in value. That means, potentially, getting back less than you put in.
Until recently, the interest rates available on cash ISA were relatively attractive. However, as interest rates have fallen, the rates on cash ISAs are coming down. The worry for savers is that the growth in their savings no longer keeps pace with inflation. While the level of savings may have stayed the same, the purchasing power of those savings will have fallen.
The growth in a stocks and shares ISA can be less predictable. There are generally two sources of growth for a stocks and shares ISA. The first is growth in the share prices. If an investor – or their fund manager – picks good companies, which can grow their profits over time, it is likely to result in share price growth, lifting the value of the investment.
The second source of growth is dividends. Many companies pay out a share of their profits in the form of dividends. You can either take the income, or reinvest the dividends to buy more shares in the company. This can be a powerful source of compound returns, particularly in higher dividend, lower growth markets such as the UK. Over the past 20 years, the return from an investment in the FTSE 100 would have been more than double had dividends been reinvested.3
How to spot growth and income opportunities in the stock market
Within global stock markets, there will always be pockets of faster growth. These will be industries that have a tailwind. This might include technology, as companies digitise or adopt AI, or healthcare, as populations age and have greater health needs. Finding these investment themes can help uncover companies that can grow faster over the long-term.
Equally, certain regions are capable of growing faster than others. For example, for 2025, the IMF predicts that emerging and developing economies will grow at 4.2%. That compares to just 1.9% for advanced economies. There are areas where growth is even faster – emerging and developing Asia, for example, is projected to grow at 5.1% next year4. While growth in an economy does not necessarily map on to growth in a stock market, it does create more fertile conditions for companies to grow their profits.
There are also certain characteristics that make companies more likely to grow. For example, a capable management team that can steer a company through difficult periods, find new sources of innovation, manage costs efficiently and create a strong culture, is likely to deliver stronger growth
than a less effective team. A good balance sheet, with low debt, will give a company greater flexibility to grow and invest. Strong market share may allow companies to build on their success.
Equally, certain companies have an established history of paying dividends and are committed to paying dividends into the future. Equity income and dividends strategies will target those companies with this consistent track record.
The outlook for income and growth investing in 2025
It has been a strong two years for stock markets, with the MSCI World index growing 19.2% in 2024 and 24.4% in 20235. However, a substantial part of this growth was from the so-called ‘Magnificent Seven’, a group of technology giants that are plugged into the growth of artificial intelligence.6 Other parts of global stock markets have not experienced the same gains. This also means they have lower valuations.
Equally, many companies are still paying attractive dividends. While the yield on the MSCI World is only 1.7%5 - a reflection of the relatively low dividends available from the technology sector – the MSCI Emerging Markets has a yield of 2.6%7, while the FTSE All Share has a yield of 3.5%.8 European larger companies also have high yields.8
This leaves significant growth and income opportunities for investors. The economic backdrop also appears benign. The IMF is forecasting global growth of 3.3% for 2025. While there are risks, including the tariff regime from the US, higher inflation and a potentially disorderly resolution of geopolitical tensions, the risk of recession has faded. Equally, if there were a benign resolution to the
geopolitical conflicts that have weighed on economic growth over the past two to three years, it would be a better environment for stock market growth.
There are interesting structural growth stories driving the global economy, such as AI and the energy transition. The trend to restructure global supply chains is also creating opportunities across the
world, but particularly in emerging economies. These are creating opportunities for companies across the world to grow their profits and pay higher dividends to shareholders.
Investment trusts for income and growth
At BlackRock, our investment trust range aims to harness these income and growth opportunities, wherever they are found in the world. Among our growth-focused trusts, we have the BlackRock Greater European Investment Trust, which aims to find European companies with long-term growth potential. The BlackRock Smaller Companies Trust and Throgmorton investment Trust aims to generate growth from investment in a portfolio of dynamic smaller companies.
The BlackRock Income and Growth Trust, looks to blend income and growth from a portfolio of UK equities. The trust places great importance on the ability of a company to raise its dividends over time. Traditional income sectors tend to be areas such as energy, mining and banks. But by focusing on growth at the same time, it brings in new areas such as healthcare, industrials, even technology. The BlackRock American Income Trust, BlackRock World Mining Trust and BlackRock Energy and Resources Income Trust also target a blend of income and capital growth.
BlackRock’s trusts that currently have an attractive income include the BlackRock Frontier Markets Trust, which targets companies in small, growing economies around the world. Latin American stock markets also tend to be higher dividend markets, which is reflected in a higher yield for the BlackRock Latin American Trust.
We believe these could be potential options for a stock and shares ISA – including lifetime or Junior ISAs - targeting capital and/or income over the long-term.
For further information on BlackRock’s Investment Trusts, please visit: www.blackrock.com/its
1 Gov UK - Capital Gains Tax: what you pay it on, rates and allowances - 23 February 2025
2 Tax Café - Capital gains tax allowances - 23 February 2025
3 IG Index - What are the average returns of the FTSE 100? - January 2024
4 IMF - World Economic Outlook - January 2025
5 MSCI - MSCI World index - 31 January 2025
6 MSCI - Global market trends and the Magnificent 7 - January 2025
7 MSCI - MSCI World index - 31 January 2025
8 Financial Times, Data Archive - World Markets at a Glance - 23 February 2025
Risk Warnings
Investors should refer to the prospectus or offering documentation for the funds full list of risks.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.
Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time and depend on personal individual circumstances.
Fund-specific risks
BlackRock Greater Europe Investment Trust plc
Counterparty Risk, Currency Risk, Emerging Markets, Gearing Risk, Liquidity Risk
BlackRock Smaller Companies Trust plc
Counterparty Risk, Gearing Risk, Liquidity Risk, Smaller Companies
BlackRock Throgmorton Trust plc
Complex Derivative Strategies, Counterparty Risk, Gearing Risk, Liquidity Risk
BlackRock Income and Growth Investment Trust plc
Counterparty Risk, Gearing Risk, Liquidity Risk
BlackRock American Income Trust plc
Capital Growth / Income Variation, Currency Risk, Derivative Risk (Derivatives, Options, Covered calls), Derivative Risk, Gearing Risk, Investment Trust Disclaimers
BlackRock World Mining Trust plc
Counterparty Risk, Currency Risk, Emerging Markets, Gearing Risk, Gold / Mining Funds
BlackRock Energy and Resources Income Trust plc
Counterparty Risk, Currency Risk, Emerging Markets, Gearing Risk, Investments in Mining Securities
BlackRock Frontiers Investment Trust plc
Counterparty Risk, Currency Risk, Emerging Markets, Frontier Markets, Gearing Risk
BlackRock Latin American Investment Trust plc
Counterparty Risk, Currency Risk, Emerging Markets, Gearing Risk
Description of Fund Risks
Capital Growth / Income Variation: Investors in the Fund should understand that capital growth is not a priority and values may fluctuate and the level of income may vary from time to time and is not guaranteed.
Complex Derivative Strategies: Derivatives may be used substantially for complex investment strategies. These include the creation of short positions where the Investment Manager artificially sells an investment it does not physically own.
Derivatives can also be used to generate exposure to investments greater than the net asset value of the fund / investment trust. Investment Managers refer to this practice as obtaining market leverage or gearing. As a result, a small positive or negative movement in stockmarkets will have a larger impact on the value of these derivatives than owning the physical investments. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Funds.
Counterparty Risk: The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss.
Currency Risk: The Fund invests in other currencies. Changes in exchange rates will therefore affect the value of the investment.
Derivative Risk: Derivatives may be highly sensitive to changes in the value of the asset on which they are based and can increase the size of losses and gains, resulting in greater fluctuations in the value of the Fund. The impact to the Fund can be greater where derivatives are used in an extensive or complex way.
Derivative Risk (Derivatives, Options, Covered calls): The Fund uses derivatives as part of its investment strategy. Compared to a fund which only invests in traditional instruments such as stocks and bonds, derivatives are potentially subject to a higher level of risk.
Emerging Markets: Emerging markets are generally more sensitive to economic and political conditions than developed markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund.
Frontier Markets: Frontier markets are generally more sensitive to economic and political conditions than developed and emerging markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund. There may be larger fluctuations to the value of your investment and increased risk of losing your capital.
Gearing Risk: Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.
Gold / Mining Funds: Mining shares typically experience above average volatility when compared to other investments. Trends which occur within the general equity market may not be mirrored within mining securities.
Investments in Mining Securities: Investments in mining securities are subject to sector-specific risks which include environmental concerns, government policy, supply concerns and taxation. The variation in returns from mining securities is typically above average compared to other equity securities.
Investment Trust Disclaimers: Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.
Liquidity Risk: The Fund's investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the Fund may not be able to realise the investment at the latest market price or at a price considered fair.
Smaller Companies: Shares in smaller companies typically trade in less volume and experience greater price variations than larger companies.
Important Information
In the UK and Non-European Economic Area (EEA) countries: this is issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.
UK Investment Trust Funds: The Company is managed by BlackRock Fund Managers Limited (BFM) as the AIFM. BFM has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited. The Company’s shares are traded on the London
Stock Exchange and dealing may only be through a member of the Exchange. The Company will not invest more than 15% of its gross assets in other listed investment trusts. SEDOL™ is a trademark of the London Stock Exchange plc and is used under licence.
Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.
The investment trusts [listed below/above/in this document] currently conduct their affairs so that their securities can be recommended by IFAs to ordinary retail investors in accordance with the Financial Conduct Authority’s rules in relation to non-mainstream investment products and intend to continue to do so for the foreseeable future. The securities are excluded from the Financial Conduct Authority’s restrictions which apply to non-mainstream investment products because they are securities issued by investment trusts. Investors should understand all characteristics of the funds objective before investing, if applicable this includes sustainable disclosures and sustainable related characteristics of the fund as found in the prospectus, which can be found www.blackrock.com on the relevant product pages for where the fund is registered for sale. For information on investor rights and how to raise complaints please go to
https://www.blackrock.com/corporate/compliance/investor-right available in local language in registered jurisdictions.
Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not
necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.
This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.
© 2025 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS and iSHARES are trademarks of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.
