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I’ve had some big winners and some big losers in my Stocks and Shares ISA in 2025. And I’m in the process of figuring out my strategy for 2026.
The big question is what I should do with my less successful investments. Should I double down on them, or cut them loose to focus on ones that have been working well?
Underperformers
The overall performance of my Stocks and Shares ISA this year has been held back by a few stocks that have fared very badly in 2025. These include the likes of Bunzl and Diageo.
It’s no surprise they’ve dragged my portfolio down this year. They’ve been some of the FTSE 100’s weakest performers over the last 12 months.
I haven’t caught all of the downturn in my ISA. In the case of Bunzl, for example, most of my buying has happened since the big decline in April.
One stock that I’ve been surprised by recently, though, is 3i (LSE:III). Since the stock crashed 26% in the last month, I’m now down 13% on my investment – so what should I do next?
A fallen star
3i has been one of the FTSE 100’s top performers over the last decade. Despite the recent crash, the stock is still up 584% in the last 10 years.
There’s a good reason for thinking it was in a bit of a vulnerable position before the big drop. It’s a private equity firm that was trading at a 50% premium to the value of its portfolio.
On top of this, that portfolio was heavily concentrated in one name – a discount retailer called Action. And it valued that asset at a punchy EBITDA multiple of around 18.5.
All of this means the 3i share price crashed when Action’s like-for-like sales growth faltered. But I think this gives me a chance to add to my investment in one of my favourite names.
Long-term differentiation
In general, 2025 has been a bad year for private equity firms. Some of the major names have found it hard to exit investments they made five-10 years ago, leading to underperformance.
This, however, highlights 3i’s unique strength. Unlike other private equity companies, it invests its own capital, rather than raising cash from third parties.
As a result, it doesn’t have to operate on specific timelines. And this means it can’t find itself needing to sell when the opportunities aren’t there in order to return cash to clients.
That’s the main reason why 3i has been so successful over the last decade. And with this key strength still firmly intact, I’m looking to double down on my investment in 2026.
Stick or twist
It’s always nice to be adding new stocks to a portfolio. But with 2026 approaching, the best opportunities for my Stocks and Shares ISA might be in companies I already own shares in.
3i is one example. Slowing sales growth at Action is a real issue, but the FTSE 100 firm’s key competitive advantage is still firmly intact – and I think this is what matters.
I’m in a position right now where my portfolio is already reasonably well-diversified. And that means I can choose to focus on adding to existing names, rather than adding new ones.
