Image
feature
Other Candid sites

Candid Financial Advice
Financial advice for a fraction of the usual cost.

Compare Fund Platforms
The UK's only fund platform comparison site for private investors.

Other Candid Guides
Calculator over 80 Calculators!

Covering almost all your money needs - use them.

Savings Target

Calculator Saving for something special? Find out how much you might need to save to reach a target amount.

Candid Guides

Our Candid Guides show you how to sort financial issues that affect most of us, in just a few easy steps. If you're still unsure what to do after reading a Candid Guide then Ask Justin and he'll do his best to help.

| Printable version | A A A |


Guide to Using fund supermarkets

If you still hold investment funds (unit trusts & oeics) directly with fund managers then using a fund supermarket could simplify things. All your funds will be held in one place (regardless of fund manager) allowing you to view your portfolio value online, make switches with ease and cut down on paperwork.

Depending on the fund supermarket you choose, there may be no extra fees over and above the usual fund charges. And using a fund supermarket via a discount broker could reduce what you end paying.

Most fund supermarkets (or 'wraps' or 'platforms' as they're sometimes called*) offer individual savings account (ISA) and self-invested pension (SIPP) options in addition to holding funds conventionally. And some also allow you to hold shares.

To keep things simple we'll just look at holding funds conventionally and within an ISA.

(* wraps or platforms tend to refer to supermarkets that offer ISA, pension and investment bond wrappers, as well as access to shares, but in practice fund supermarkets, wraps and platforms are often used to refer to the same thing).

Action Points:

1. Decide whether a fund supermarket/wrap/platform is right for you

If you only hold funds with one management group and have no intention of switching to, or using another in future then there's probably little advantage from using a fund supermarket. Otherwise you'll almost certainly derive some benefit provided you choose carefully to avoid paying charges for features for you don't need.

2. Make a list of all your existing funds

This is important for two reasons. You'll need this anyway if you decide to move your funds into a fund supermarket and it'll allow you to check whether the fund supermarket you're considering offers these funds.

3. Decide whether to go direct or use a financial adviser or discount broker

Going direct might save you some money compared to using a financial adviser, but is unlikely to be cheaper than using a discount broker (ATS i.nvest and HL Vantage being the exceptions). Of course, cheap is not necessarily best if you make bad investment decisions, so consider whether you might benefit from good advice (often difficult to find!).

Discount brokers offer access to at least one or more fund supermarkets, you can view a comprehensive list (including the fund supermarkets they offer) here.

4. Choose a fund supermarket

Making the right choice is important, as moving investments from one fund supermarket to another is currently difficult and/or expensive (see the questions section below for more details). Your choice will likely depend on several factors:

  • Are you using a financial adviser or discount broker? Most will only have relationships with one or two fund supermarkets, so your choice will be restricted by your chosen adviser or broker.
  • Do you want to hold your pension on the same platform? Most offer a pension option but charges vary widely, so check these out before deciding if relevant.
  • Are your chosen funds available? While most fund supermarkets offer ample fund choice, some funds are not available across the board.
  • Will you want to hold shares, investment trusts or exchange traded funds (ETFs)? If so, you'll need to use a supermarket that offers this facility - not all do.
  • Does the supermarket offer any useful tools and analysis? For example, there might be useful portfolio breakdown tools that allow you determine the asset spread and volatility of your whole portfolio.
  • Are charges reasonable? Work out how much you could end up paying and compare with others.

5. Transfer your existing funds into your chosen supermarket

You've got two options here.

  1. Sell everything and repurchase within the supermarket (in the case of ISAs this is achieved using a 'transfer' form). This may incur initial fund charges, especially if you're not using a discount broker.
  2. Complete a 're-registration' form which moves your existing funds 'as is' into the supermarket. Usually no charge, although not possible if your funds are already with another supermarket/platform (see questions below).

6. Obtain an online username/password

You don't have to view your investments online, but it's very convenient. You should also be able to buy and sell funds, much easier than filling in paper forms.

Fund Supermarket Comparison

To help you decide which fund supermarket might be a good choice we've compared 10 (all links to fund supermarkets are unpaid).

Allow you to invest directly

Alliance Trust Savings rebates all fund commissions, while Hargreaves Lansdown rebates some trail commission.

Fund SupermarketFund GroupsFundsShares?Annual Fee (ISA)Fund Switch ChargeMinimum Contributions
Lump SumTop-UpMonthly
Alliance Trust Savings i.nvest >40 >1,400 yes £40 & VAT £12.50 £50 £50 £50
Fundsdirect >150 >2,300 no no 0.75% £1,000 no min no
Fidelity FundsNetwork >65 >1,100 no no 0.25% £1,000 £250 £50
Hargreaves Lansdown Vantage >190 >2,400 yes 0.5% & VAT on investments where no trail commission (capped at £45). Some funds charged at £1 or £2 per month. no £1,000 £250 £50
Last updated 29 November 2012.

Only available via financial advisers / discount brokers

Most financial advisers only offer access to one or two of the below, so your options may be influenced by your choice of adviser of discount broker. Platforms such as Nucleus and Transact are pitched at investiors with larger portfolios who want a wide choice of investments and tax wrappers, which is why they generally cost more.

Fund SupermarketFund GroupsFundsShares?Annual Fee (ISA)Fund Switch ChargeMinimum Contributions
Lump SumTop-UpMonthly
Ascentric >150 >3,000 yes £60 & 0.15% on 1st £60,000, 0.25% on next £940,000 £12.50 £1,000 no min no
AXA Elevate >100 >2,000 no no 0.25% £1,000 £100 £100
Cofunds >90 >1,500 no no 0.25% £1,000 £500 £50
Nucleus Financial >120 >2,200 yes 0.35% no £20,000 no min £200
Skandia >80 >1,100 no £52.32 no £2,500 no min £99
Transact >350 >7,500 yes 0.55% & £12 0.20% £5,000 £500 £50
Last updated 20 January 2011.

Questions

What is a fund supermarket?

It's basically an administrative service that holds all of your investment funds under one roof. They don't manage money or run their own funds (although some supermarket owners might also run a fund management business). Imagine a car dealer who's a main agent for all the major manufacturers, so whatever car you want you can buy and get it serviced from one garage - well fund supermarkets do the same kind of thing for funds.

Are they safe?

Yes, in so far as your money is still held in the underlying funds as normal. And unit trusts/oeics must ring fence your money from their business, giving you protection if either the fund supermarket or fund manager goes bust.

Do they cost extra?

Sometimes. Some platforms charge an annual fee and you might end up paying extra fees for certain wrappers, for example pensions. However, this might be offset by reduced fund charges so always compare overall costs.

What's re-registration?

Re-registration is the process of moving your existing funds 'as is' into a fund supermarket. The funds don't need to be sold, which means your money isn't out of the market, although the process can take up to several weeks.

Why can't I re-register my ISA from one fund supermarket to another?

Three of the largest fund supermarkets, Cofunds, Fidelity FundsNetwork and Skandia don't allow ISA re-registation away from their platform to others (FundsNetwork also precludes this for non-ISA investments below £40,000). There's no practical reason why you can't, it's just fund supermarkets trying to prevent you moving to competitors. It's very unfair and the FSA has said all platforms must offer this facility by 31 December 2012.

Can I only invest in funds?

Some fund supermarkets also provide access to shares, including investment trusts and ETFS etc.

How do fund supermarkets make money?

Most charge fund managers for making funds available on their platform, the going rate seems to be around 0.25% a year of funds under management. This fee effectively comes out the annual management charges you pay on funds, so it's not an explicit extra charge to you. They might also charge you a fee too.

Why do fund managers agree to pay fees? It saves them having to administer the funds themselves (e.g. they don't have to bother sending you valuations or answering your queries) and if they're not on platforms these days they'll lose out on sales.

Useful Information & Links

You can read more about discount brokers on our ISA Discounts Action Plan page.

You can read more about advice and commissions on our financial advice page.