Best Fund Supermarket Platforms In 2020
Having decided to use a fund platform for your investments - the question is which one is best for your needs?
Today’s investor in 2020 has a lot of options to choose from.The functionality offered by providers to get your business is improving rapidly. We have outlined below some of the key considerations you need to be mindful of in making your choice.
Best Fund Supermarket Platforms In 2020
Key considerations in selecting a fund supermarket include:
- Cost - Picking the “cheapest” is not as simple as it sounds, as each platform has its own costing model which often makes it difficult to compare like for like. If you know what type of investing you are going to do this can make the process easier e.g. if you are predominantly going to buy and sell shares. The amount you are going to invest can also impact what platform is best for you as some platforms reward investors who invest over a certain level e.g. £250,000.
- Functionality - A key consideration is ease of use; tools offered by the provider including research and analysis; Breadth of funds and investment markets to empower the DIY investor.Mobile apps are increasingly becoming important
- Tax wrappers offered - Not all platforms offer an ISA, Junior ISA, Lifetime ISA or Self Invested Personal Pension (SIPP) accounts (or wrappers) for your investments.
- Investment choice - While choice is great be realistic on what you actually need. A number of fund supermarkets offer model portfolios making it easier for you to invest based on your risk profile and timeframes.e.g. Fidelity offer a fund selection tool called pathfinder which helps you choose funds based on a risk profile from 1 to 5, the amount you wish to invest and timescale.The tool then gives you an estimate based on poor, average, good market conditions over your selected time frame what you investment might be worth at the end of the term.You can decide on how you want your money to be managed; either on a "expert focus" where your money is spread across a best of class fund managers or a "cost focus" where your money is invested across global markets whilst keeping costs down.
How do you choose a fund supermarket?
The services offered by the different types of fund platforms vary widely, and so do the costs.
This isn’t a chop-and-change decision that you’ll revisit every year or so it is important to select the right platform provider for you:
Top 10 criteria you’ll want to consider:
1. Do you already have an idea of the investments you want to invest in?
If you are looking to trade shares only then a platform that offers low cost dealing fees may be a priority. A number of platforms offer advanced research trading tools to entice you to them.
Or you may want buy foreign shares (not all platforms cater to this) or trade in ETFs (exchange-traded funds – usually tracking an index).
If you are more interested in collective funds then this again may determine who you go with. Charging structured for funds held on the platform will vary. Over time the impact of such charges can be significant.
2. Do you want to manage your own ISA investments, or have someone else do it for you?
Your answer to this will depend on:
- How confident are you about investing?
- Will you enjoy getting underneath the bonnet?
- Do you have enough time to be an active manager?
- Would you mistrust someone else making these decisions on your behalf – or have more confidence in their market knowledge than your own?
3. Do you want to invest just in funds, or shares and funds?
Check what’s on offer, if you want to have the flexibility: some platforms don’t offer both.
4. Do you want your platform to be independent or fund-owning?
Do you want to be able to invest in independent funds, or are you happy investing via a fund manager such as Legal & General that offers just its own funds?
5. Do you have a self-invested pension?
You may want to look for a platform that can manage your self invested personal pension or SIPP as well: not all of them can.
6. Do you want to do a lot of trading?
Active investors will want to look for a platform that offers the best research, and the lowest fees for volume trades in funds, and stocks and shares.
7. How easy to use is this platform: what kind of tools and customer service does it offer?
These are often the criteria that count most highly with users, so do some research and read the reviews.
- Many investors are prepared to pay a bit more in fees for a platform that offers really useful apps and services.
8. How much are you investing?
You will want to look at the fee structures, and the thresholds for reduced fee charges.
- Platforms that charge flat-rate fees typically work better for large investors with £50K or more in their portfolios.Interactive Investor are one of the few fund platforms that work on a fixed flat monthly fee basis, currently £9.99 pm
9. How has this platform performed?
This is a key consideration if you’re looking at having your investment managed by the platform, rather than going DIY.
You’ll want to look at the kind of returns that its investors have been getting: read the reviews and compare the results of the platforms you’re considering.
10. And finally… how much will it cost?
If you’ve worked through the other decision criteria first, you’ll understand that you shouldn’t choose solely on cost.
Some of the more expensive platforms are highly rated by their clients for usability and client support, or show consistently good returns.
Interactive Investor operate on a flat fee basis charging £9.99 pm. Fidelity, Hargreaves Lansdown, AJ Bell for example, charge tiered account management fees which are higher than others, but they’re rated highly by investors for ease of use and good customer support. Based on how much you are looking to invest this may sway your decision. Fidelity fund supermarket offer the same service fee across all your investments. So they charge a service fee of 0.35% pa on the first £249,999 held and then 0.2% after that. So if you held £300,000 with them they would charge 0.2% pa on the whome amount.
- Choosing active management of your investments isn’t always cheaper than DIY: there are some price advantages to trading in scale.
- There has been a push to get platforms away from commission-based charges towards “clean pricing” annual fees.
- You need to be looking at annual administration charges, dealing fees, and any other costs, including exit charges.
You can choose from:
Do it with me fundsupermarkets and Do it for me fundsupermarkets
Many fundsupermarket platforms offer both. Catering for first time investors through suggested fund options or strategies through to experienced investors where the focus is on providing advanced tools to allow independent decisions.
You get a range of active investment management, from advice and assistance to completely hands-free:
Platforms that do both:
See below 4 of the largest platforms in the market: