As the April 5th deadline approaches, many investors are reviewing how effectively their Stocks & Shares ISA is positioned for the years ahead.
The advantages of a Stocks & Shares ISA – tax-free income and capital gains – are most valuable when paired with a portfolio built to endure. A diversified approach is ultimately a way to use the ISA wrapper as it was intended: as a long-term, tax-efficient shelter for potential capital and income growth.
Diversification has long been regarded as a sensible foundation for long-term investing. The principle is simple, but in application it can often be challenging to manage risk efficiently and avoid over-reliance on any single outcome.
The current investment backdrop is unusually complex. Investors are navigating geopolitical uncertainty, questions around inflation and interest rates and the disruptive impact of AI technology.
At the same time, global equity markets have become increasingly concentrated, with a small number of large US companies dominating index performance.
Paul Niven, F&C Investment Trust Fund Manager, is clear that this does not invalidate diversification.
“Even with the US and a small number of exceptional companies concentrating markets and dominating returns in recent years, it has not re-written the rules of finance,” he says. “Diversification from a portfolio perspective is as important today as it has ever been”
One of the key risks in periods like this is mistaking short-term disruption for permanent change. The pandemic provided a vivid illustration of how quickly investor enthusiasm can coalesce around a narrative – and how quickly it can unwind. Diversification, Paul argues, helps investors avoid both overexposure to investment fads and underexposure to the longer-term winners that ultimately drive market returns.
“Diversification can help investors overexposure to transient investment trends… while avoiding being underexposed to areas which turn out to be key drivers of future returns.”
Research has shown that only a small minority of stocks account for the bulk of long-term market returns. The challenge, of course, is that identifying those winners in advance is far from straightforward.
F&C’s approach has been to accept that uncertainty, rather than attempt to eliminate it through concentration. “There is more than one way to win in investing,” says Paul. “Clearly defined approaches to growth, value and quality have all been proven to deliver positive excess returns over the market in the long run”.
“There is more than one way to win in investing.”
By blending these styles across regions and managers, F&C aims to increase the probability of owning future winners, while reducing the risk of relying too heavily on any single investment thesis. This philosophy is evident in the trust’s willingness to invest both in listed equities and private companies – and to draw on specialist managers with different perspectives.
Practical diversification within a Stocks & Shares ISA
For investors reviewing their ISA ahead of the deadline, the practical question is how diversification is best achieved. Adding individual holdings can increase complexity, while passive exposure may leave portfolios heavily skewed towards a narrow part of the global market.
F&C Investment Trust offers a different approach: a single holding designed to deliver broad diversification. With exposure across more than 30 countries, multiple investment styles and both public and private equity, it can act as a core or complementary holding within a Stocks & Shares ISA.
“Our philosophy is to invest in high quality managers who look for needles in different haystacks.”
As Paul puts it,
“F&C actively employs diversification across countries, sectors and investment approaches to help us prepare for, and smooth, the inevitable bumps in the road in our investment journey”
Using the ISA deadline wisely
With the ISA deadline approaching, investors may be tempted to focus on tactical decisions. But history suggests that long-term outcomes are shaped more by portfolio construction than by short-term timing. Diversification remains one of the most effective tools available to investors seeking to make the most of their ISA allowances.
For Stocks & Shares ISA investors, the lesson is clear: diversification still matters – and building it thoughtfully into an ISA portfolio may be one of the most valuable decisions to be made before the end of the financial year.
Capital at risk. The value of your investments and any income from them can go down as well as up and you may not get back the original amount invested. The mention of any bonds or securities is not a recommendation to deal. There is no guarantee that dividends will continue to increase.
Issued by Columbia Threadneedle Management Limited, No. 517895, registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority. Approved as at 10 February 2026.
