Defiance Research 27 October 2025

How to play potential ISA reforms

After a couple of weeks travelling I’ve realised titling articles ‘Weekly Digest’ may set an unrealistic expectation. I’m moving to a more flexible publishing schedule - you’ll hear from me when I have actionable insights to share rather than on a fixed weekly cadence.

Macro News:

The last fortnight has been noisy…but nothing much has really changed investment strategy wise.

A year end melt-up sounds looks plausibly as fund managers chase the market. Remember many were caught out in April and have had to play catchup since.

The main risk spooking fund managers at present is private equity/credit – and there has been some examples of fraud in that space. However, it’s important not to let memories of the 2008 financial crisis cloud our judgment every time some credit problems appear. 2008 was before social media really took off, and I wonder if some of the insane lending that caused the US housing bubble could have occurred with social media. Perhaps I’m being overly optimistic, but I imagine the people taking out the so called NINJA loans back then would have been all over social media boasting about it (and probably selling an online get rich quick course off the back of it). With that much visibility, would the bubble have still been able to inflate so much?

Anyway, continuing with the optimism I notice the IMF upgraded forecasts for economic growth in 2026. Inflation also continues to slowly come down (it’s still above target in most developed nations, but it’s incremental improvement).

All of which contrasts with the BofA fund manager survey which showed most fund managers (70%) choosing stagflation as the word best used to describe expectations for the next year (other options where boom, stagnation and goldilocks).

So, fund managers expect stagflation while inflation is dropping, growth is being upgraded, and the fund managers themselves hold record low levels of cash…..

I think the stagflation talk is overdone and should start to recede for a while.

Stock Update:

Perpetua Resources ($PPTA) announced a strategic equity investment today from Agnico Eagle Mines and JPMorganChase. They view this funding as better than selling a royalty or stream on the future gold mine.

The market reaction has been positive.

Stocks to Watch:

A recent FT article claimed the chancellor is considering a change to the Stocks and Shares ISA rules in November (the budget is the 26^th)

To help support the UK capital markets the rumour is that going forward a certain % of the ISA would have to be held in UK stocks, similar to the previous PEP rules (which were 75% and then 50% for context)

ISA reform is something that keeps rearing its head. Changes to the Cash ISA allowance are also rumoured, and more likely to happen in my opinion.

If, the mandatory UK stock allocation comes to pass – this could have a big impact on UK stocks. Buying any high beta UK stock would likely work.

However, I think I’ve found a few stocks that would benefit more than most.

Here is one of them: