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Investing with a Stocks and Shares ISA is a proven strategy for building long-term wealth. And over the last 12 months, with UK shares going on a bit of a rampage, ISA investors have seen their fortunes growth much faster than usual.
Historically, the FTSE 100 typically generates an annual return of 8%. Yet, since last October, the UK’s flagship index is up a massive 18.9% after counting dividends. And for some stock pickers, the returns have been even more explosive with Fresnillo (LSE:FRES) shares skyrocketing by 331%!
That’s enough for a £20,000 ISA to surge to £86,200!
So while past performance doesn’t guarantee future returns, the question now becomes, can investors enjoy similar returns as we move into 2026 and should they consider Fresnillo?
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What the experts say
Despite ongoing economic challenges, the institutional consensus for the FTSE 100 over the next 12 months seems to be quite bullish.
For example, UBS has predicted that the large-cap index could surpass the 10,300 point threshold by as early as June next year, driven by earnings recovery momentum, friendlier trade policies with the US, as well as stable currency exchange rates.
In other words, as long as…
- The UK-US trade deal expands
- No more tariffs are thrown into the mix
- The Bank of England helps spark economic growth through interest rate cuts
- Commodity prices (particularly fossil fuels and metals) rise
- The British pound remains stable at current levels
… British investors could see another year of impressive double-digit total gains, growing £20,000 into roughly £22,350.
But of course, that’s a lot of conditions. And if they fail to materialise, UBS has also projected that UK shares could remain flat overall or potentially even fall. Needless to say, that wouldn’t be good news for ISA investors, especially with inflation sitting at 3.8% right now.
What about stock pickers?
Looking again at Fresnillo, the gold & silver Mexican mining giant could also enjoy a solid run over the next 12 months. Even more so, if the price of precious metals rises due to rising geopolitical uncertainty.
That certainly seems to be a core theme among institutional investors tracking this business, particularly as the firm seeks to ramp up production volumes moving into 2026.
Remember, mining companies like Fresnillo operate with mostly fixed costs. So higher commodity prices often translate into higher earnings – a key catalyst behind the stock’s recent outperformance.
However, it seems that most of these expectations are already baked into the share price. JP Morgan’s among the more bullish institutional investors tracking this business, but has placed its price target at 2,100p – roughly 10% lower than where shares trade today.
So at today’s valuation, any slowdown in commodity pricing, or the announcement of operational challenges such as regulatory intervention or rising input costs, could open the door to elevated volatility. As such, investing £20,000 today could leave investors with less than they started with.
Fortunately, there are plenty of other investing opportunities beyond Fresnillo that could make for potentially wonderful additions to a Stocks and Shares ISA.
