Moneysupermarket Launches Investment Platform for Novice Investors
The price comparison website enters the investment market with a 'low-cost' platform, but experts suggest other options may be cheaper for growing portfolios.
Moneysupermarket has launched a new do-it-yourself investment platform aimed at novice investors, offering access to 40 funds and exchange-traded funds (ETFs). The platform, named Investing by Moneysupermarket, provides customers with a choice of ready-made investments, including Vanguard LifeStrategy funds, as well as individual funds and ETFs. The company describes the service as 'low-cost,' but an annual account fee of 0.34% could become expensive as investment pots grow.
While there are no trading fees, the account fee translates to £3.40 per year for a £1,000 investment. For larger portfolios, this fee could surpass charges from competing platforms. Some investment platforms catering to beginners do not charge platform fees at all, such as Freetrade, InvestEngine, and Prosper, which also offer Vanguard LifeStrategy funds.
The Investing by Moneysupermarket platform is designed for beginners, with a limited selection of investments and no option to trade individual stocks and shares. Investors can choose from funds that track major market indices, including the US S&P 500. The platform offers both a tax-free stocks and shares ISA and a general investment account. New users will benefit from their first three months of investing effectively being free, with monthly platform fees credited to their Supersaveclub wallet, a loyalty scheme offering cashback and rewards.
Lis Barton, chief customer officer at Moneysupermarket, stated that the new platform is a significant step in the company's aim to become a financial companion for its customers. This follows the recent launch of Savings by Moneysupermarket, a service that allows users to compare and manage savings accounts from multiple banks through a single login.
Financial experts note that while Moneysupermarket's entry into investing is a positive step for beginners, investors might find more cost-effective options as their investments grow. For instance, AJ Bell Dodl also offers ETFs and Vanguard LifeStrategy funds for beginners, with a charge of 0.15% of the investment value. However, AJ Bell Dodl has a minimum monthly charge, making Moneysupermarket potentially cheaper for very small portfolios. Investments reaching approximately £3,530 could make AJ Bell Dodl more economical.
Platforms such as Freetrade offer no platform fees, providing a straightforward way to discover and purchase investments. Freetrade also offers a wider range of accounts, including a self-invested personal pension (Sipp) and junior stocks and shares ISA. InvestEngine focuses solely on ETFs, enabling investors to access broad market exposure through a single product. Prosper aims to further reduce costs by refunding underlying management fees on over 30 funds, potentially allowing investors to invest at zero cost, although underlying fees from investment managers are still applicable.