The best ISA funds in 2026

As we pass the midpoint of 2026, there’s no sign of a summer lull for markets, personal finances, or indeed the weather, as sweltering heatwaves grip much of the UK. If anything, the pace of change has only intensified. From sharp twists in UK politics to a tentative peace deal between the US and Iran, the global backdrop remains as fluid as ever.

Looking back on the past six months, geopolitical events have shaped short‑term moves, with the escalation of conflict in the Middle East pushing energy prices sharply higher, reviving fears of inflation, and injecting significant volatility into markets. That in turn triggered sharp rotations between sectors and regions, with investors repeatedly reassessing the balance between growth and inflation risk.

Earnings momentum accelerates 

Yet the worst fears of severe energy and trade disruption have not materialised. The global economy has shown a notable degree of resilience, adapting to supply shocks and geopolitical tensions more quickly than many had expected. This has allowed markets to look past concerns around higher interest rates and instead focus on the scale of the opportunity for growth and productivity improvements presented by AI, automation, and digital infrastructure. 

At the heart of this sits the semiconductor industry. Companies such as Taiwan Semiconductor Manufacturing Company (TSMC) and Korea’s Samsung Electronics and SK Hynix have been key beneficiaries, given their dominant positions in the production of advanced chips and memory. As demand for AI‑related hardware has accelerated, these companies have seen strong earnings momentum and renewed investor interest, helping to drive returns across both regional and sector specialist funds.

In addition, companies involved in cloud computing, infrastructure, and the wider supply chain required to support the next phase of growth have fared well. While it wasn’t a good period for all the tech sector – for instance Microsoft and Meta shares fell over the six months – overall it reasserted market leadership after a more challenging spell. 

An interconnected ecosystem from the US to Asia

Against this backdrop, the strongest‑performing funds in the first half of the year were varied but part of a closely intertwined story. The best returns were heavily concentrated in technology and Asia, or in investments in emerging markets that encompass Korea. 

Even the surprising appearance of a Russia specialist – presently suspended from dealing – in the top ten is down to the AI trend. Almost half the assets of the locked-up Liontrust fund are in Nebius Group, the Dutch AI infrastructure company that splintered from Russian search engine business Yandex in 2024. 

Performance has therefore been far from broad‑based. Returns have been concentrated in specific sectors, companies and geographies, unwinding some of the broader regional and sector participation seen early in the year. While global markets have been resilient overall, navigating them successfully has required exposure to the specific themes driving returns. UK and European equity funds – and even many global funds – have been pedestrian in contrast so far this year, partly because they lack direct exposure to the AI-build out trend.

Please note: the value of investments can fall as well as rise and strong short-term returns from top performing funds can quickly reverse. Investors may get back less than invested. Past performance is not a reliable indicator of future returns. 

Here are the best performing investment funds available in a Stocks & Shares ISA or SIPP in the first half of 2026, as well as for discrete years for context:

Figures are shown in pounds on a percentage total return basis, bid to bid price with net income reinvested. Source: FE Analytics, data to 30/06/2026. Onshore and retail open-ended funds only.

What are Investment Association (IA) funds?

There are several thousand funds on sale in the UK. The Investment Association divides these into about 45 sectors, broad groupings that help investors and advisers compare funds of similar types before looking in detail at individual funds. 

Investment decisions in fund and other collective investments should only be made after reading the Key Investor Information Document or Key Information Document, Supplementary Information Document and Prospectus.

Find out more: Why funds can be a great investment shortcut

How to choose funds for an ISA

Your annual ISA allowance is a valuable shelter from capital gains tax and income tax on your investments. But with thousands of funds available, where do you start when trying to pick the best ISA funds for your tax-free allowance?

• 1. Decide on your risk approach –Higher risk can mean higher returns but also bigger losses. Your goals and time frame will help shape the risk you are willing and able to take.
• 2. Understand asset classes – There are various asset types including equities (shares), bonds and property. Diversifying across them can reduce risk. Always fully understand where and how your chosen fund invests,
• 3. Choose how hands-on you want to be – Building a balanced portfolio is complex. Multi-asset funds can offer a shortcut for beginners or a core holding for experienced investors.
• 4. Choose income or growth (or a combination) – income funds pay out regularly, which is great for retirees, whereas growth funds are focused on long-term wealth building.
• 5.  Look beyond past performance – past returns ≠ future results. Always understand a fund’s strategy, risk level, and when it can likely perform best through the fund factsheet and Key Investor Information Document.

Find out more: Eight tips on how to choose an investment fund