The FTSE 100 has just enjoyed its best year since the great financial crash. Rising almost 18% over the course of 2025, it’s delivered a return that’s supercharged many a Stocks and Shares ISA.
As a holder of many Footsie shares myself, I’ve benefitted too from last year’s stratospheric price rises. HSBC, Games Workshop, and Coca-Cola HBC are just a few blue chips I own whose share prices took off in 2025.
Some of these have been millionaire-maker material. A £500 a month investment in Games Workshop shares 10 years ago would have generated £1,005,378, based on capital gains and dividends.
But could investing in a FTSE 100 tracker fund help ISA investors today build a million-pound portfolio? I have my doubts.
Why has the FTSE 100 jumped?
UK large-cap shares have enjoyed a stellar year for various reasons. Demand for FTSE shares soared as global investors sought cheap stocks to buy. They also rose as interest in dividend-paying stocks heated up.
Strength across the financial services, defence, and mining sectors also propelled share prices in 2025. These industries all feature heavily on the index.
For long-term investors, the FTSE 100‘s rise has brought as much relief as it has cause for celebration following years of underperformance.
Over the last 25 years, it’s delivered an average annual return of roughly 7%. That’s far below what it produced last year. And it’s a return that is unlikely to make UK investors into stock market millionaires.
Investing in an ISA
Let’s say we have an ISA investor who’s been investing £500 a month in a FTSE 100 tracker fund. They’ve been doing this for 25 years to build a healthy nest egg for retirement.
Based on the average return over that period, they’d have made £405,036 by the time they retire. That’s not bad. But that’s clearly a long way off a million-pound portfolio.
Past performance isn’t always a reliable guide to future returns, of course. And the FTSE 100 could follow that bumper 2025 with much higher returns from this point on.
Building a £1.3m portfolio
Personally speaking, I think a better way of targeting life-changing wealth is to also invest in high-power US growth shares. It’s a strategy I’ve embraced by buying several S&P 500-focused exchange-traded funds (ETFs), including the iShares Edge USA Quality Factor ETF (LSE:IUQA).
Since its creation almost a decade ago, it’s delivered an average annual return of 14%. If this continues, a £500 monthly investment here over the next 25 years would build an ISA worth £1,347,913.
This fund’s focus on “US companies that have historically experienced strong and stable earnings” has clearly paid off handsomely. With around 35% of its holdings focused on tech stocks, returns have rocketed as this century’s digital revolution has accelerated.
Some of its major holdings today include Apple, Nvidia, and Microsoft. Looking ahead, this provides enormous growth potential as new tech segments like AI, cloud computing, and cybersecurity take off.
That’s not all, as the fund’s exposure to multiple other sectors (including financial services, consumer goods, and telecoms) provides additional growth opportunities as well as diversification benefits.
Like any shares-based ETF, this fund exposes investors to potential stock market volatility. But for investors looking to build substantial wealth in an ISA, I think it’s worth serious consideration.
