Charges for UK fund supermarkets are likely to change significantly over the next year due to the FSA’s Retail Distribution Review (RDR) and information in this table may soon be out of date. You may want to read the article on RDR and unbundled pricing to understand the implications before considering which fund supermarket to use.
Comparing UK fund supermarkets can get slightly confusing because the term ‘fund supermarket’ is often used to mean two different things. One is the discount brokerage through which you invest and the other is the underlying platform that handles the administration of your account.
In some cases, both operations are part of the same firm, as is the case with Hargreaves Lansdown Vantage or Alliance Trust Savings i.nvest. But in most cases, they are separate. One discount broker can offer more than one fund supermarket and one fund supermarket can be available through more than one broker.
For a fuller explanation of how all this works, see the guide to fund supermarkets. The table below tries to make the comparison as simple as possible by listing only the cheapest broker for each platform, where there is a clear winner on price. For example, Cavendish Online is currently the cheapest way to invest through FundsNetwork, so it’s the only broker listed for that platform. The exception is the Cofunds platform, for which Clubfinance, ICICI and Interactive Investor are all listed, since the cheapest will depend on portfolio size.
All the most competitive supermarkets now rebate 100% of initial commission on most funds, so this isn’t included in the table. The key consideration is how much trail commission a supermarket rebates and how cost-effective its other charges will be – together with whether it has the funds you require. (For a fuller explanation of initial and trail commission, see the above article – briefly, initial commission is the up-front charge, trail commission is the ongoing payment to the broker and the platform charge is the ongoing payment to the platform.)
Of the firms that will probably have post-RDR rates close to their current schemes, Cavendish generally comes out as the cheapest option for smaller portfolios, while Alliance Trust Savings or Interactive Investor can be better for larger portfolios. Hargreaves Lansdown has one of the widest range of funds within a single platform and is very popular, but its charges are starting to look uncompetitive. Remember that not all funds are available on all platforms, so you will need to weigh up whether your chosen supermarket has the funds you want, as well as considering its rates.
|Broker||Platform||Available funds||Direct fees||Commission rebates||Minimum lump sum||Minimum top up||Minimum regular|
|Alliance Trust Savings||i.nvest (own)||1,400+ from 40+ managers (PDF)||£12.5 per purchase or sale (£1.5 for monthly investments), quarterly fee of £10+VAT per account||Rebates all broker trail commission and platform commission||£50||£50||£50|
|Bestinvest||Select (own)||2,000+ from 75+ managers (Web page)||Annual fee of £50+VAT if you hold investments that pay no trail commission||Rebates some broker trail commission (typically one-third to one-half)||£500||£50||£50|
|Cavendish Online||FundsNetwork||1,200+ from 70+ managers (Web page)||None||Rebates all broker trail commission||£1,000||£250||£50|
|Clubfinance||Cofunds||2,100+ from 95+ managers (PDF)||None||Rebates 75% of broker trail commission||£1000||£500||£50|
|Clubfinance||Skandia||1,000+ from 80+ managers (PDF)||Annual fee of £68.50||Rebates 75% of broker trail commission||£2500||No min||£99|
|Clubfinance Frequent Trader||Pro Icon||2,500+ from 240+ managers|
|Annual fee of 0.35%, with a minimum quarterly charge of £25||Rebates all broker trail commission and platform commission||n/a||n/a||n/a|
|Hargreaves Lansdown||Vantage (own)||2,400+ from 200+ managers (Web page)||Funds that pay no trail commission are subject to £2 per fund per month fee||Rebates some broker trail commission (typically one-third to one-half)||£1000||£250||£50|
|ICICI Bank||Cofunds||2,100+ from 95+ managers (PDF)||Annual fee of £25 (or £3 per month) for ICICI Bank Account holders, annual fee of £35 (or £4 per month) for others||Rebates all broker trail commission||£1000||£500||£50|
|Interactive Investor||Cofunds||2,100+ from 95+ managers (PDF)||£10 per purchase or sale (£1.5 for monthly investments), quarterly fee of £20 per client offset against trading fees||Rebates all broker trail and Interactive Investor's share of the platform commission||£20||£20||£20|
|Sippdeal||Own||2,300+ from 90+ managers on core funds list (PDF), others available at higher cost||£9.95 per purchase or sale (none for monthly investments in most core funds), quarterly fee of £12.5 if you hold funds not on core list||Rebates some broker trail commission (typically one-third to one-half)||£500||£500||No min|
Notes on the UK fund supermarket comparison table
1) You should be aware that the FSA’s Retail Distribution Review banned trail commission on new investments for advisers with effect from January 2013 and is likely to do the same for platforms by early 2014. Consequently, the charging structures used by these fund supermarkets may change significantly within the next year.
2) Some of the brokers listed offer more than one platform – in each case, the most competitive solution(s) are listed. Specifically, Clubfinance also offers FundsNetwork platform, but Cavendish is cheaper for FundsNetwork. Commfreefunds also offers FundsNetwork, but Cavendish will be cheaper. Cavendish previously also offered the Cofunds platform as well as FundsNetwork – existing clients can continue to use this, but only FundsNetwork is available to new clients.
3) Interactive Investor is based on Cofunds – this isn’t immediately apparent on browsing the supermarket details, but is stated on this page. The Interactive Investor site claims to have 2,800+ funds from 90+ managers (web page), which is more funds than Cofunds itself claims – exactly where the difference is coming from isn’t clear (it may be double-counting different share classes of the same fund, as some other providers do).
4) There are other major platforms in the UK, some of which offer a wider range of funds (albeit usually at higher cost). These include Ascentric, AXA Elevate, Nucleus and Transact. However, individual investors can’t open accounts directly and there don’t appear to be any discount brokers offering any of them yet – to get access you need to go through an independent financial adviser.
Information in the UK fund supermarket comparison table comes from the brokers’ websites and brochures, conversations with broker staff and conversations with investors who use the services. While I try to ensure it is accurate and up-to-date, I cannot guarantee that. You should always check current terms and conditions before opening an account. If you identify any errors or omissions, please email me using the contact form.