Update October 2013: There is now a new version of this comparison incorporating changes to brokers’ fees over the past year. See Best ISAs for International Stocks October 2013.
Update March 2013: Saxo Bank is closing the Modern Wealth Management service and introducing an ISA wrapper on its Saxo Trader platform. This seems likely to work out slightly more expensive than the Modern Wealth Management example below, but will apparently allow access to a much wider range of exchanges. The comparison table will be updated once I have full details of the revised service.
I’ve updated the tables from the Best ISAs for international stocks post from April to reflect a few fee changes and include a new broker. Some changes and key points are:
- iWeb has cut its dealing fee to £5 per trade. On the downside, its foreign exchange margin is scheduled to increase to 1.5% in April 2013, which will make it significantly more expensive. The figures in the table are based on the current margin, but estimates based on the increased margin are included in the footnotes.
- Sippdeal has recently been added to the broker database and added to the tables for the first time. I wasn’t aware of this firm’s international offering until recently – all told, the cost structure looks very competitive if you want to trade in CREST-settled foreign stocks.
- The figures for iDealing have been changed to be based on a 0.5% foreign exchange margin. Like Sippdeal, iDealing passes on the market maker’s FX commission without adding its own – the firm has previously told me that 0.25% was a typical mark-up, but based on figures from Sippdeal and elsewhere, I think this is probably too low for the relatively small deals I’m factoring into the table, so have adjusted it for this example.
- Admin fees/inactivity fees for Alliance Trust, Halifax and Selftrade have changed slightly since the last update, although this has had relatively little impact on their overall competitiveness.
The estimate for Saxo Modern Wealth Management is based on its scheduled 0.5% regular FX charge rather than the introductory offer of no FX mark-up.Saxo has now made the 0% FX charge its permanent rate, so the figures have been updated – this makes it look extremely competitive, albeit for a limited range of markets.
When comparison shopping for ISA, be aware that many firms will charge a fee to close an ISA. What’s more, of course, it’s only possible to open a single stocks and shares ISA in each tax year – you can transfer an open account to a new provider, but this will also carry a charge.
I’ve tried to include each broker’s fee for transferring out individual stocks or closing the account in the table, although it has to be said that in some cases, the charges are not entirely clear. Generally, most will charge a fee per holding to transfer the stock PLUS an additional fee to transfer or close the ISA wrapper, but some charge no account fee and TD Direct/NatWest appears to charge a flat fee if you choose to transfer the whole account.
Dealing charges FX commission ISA cost Markets available Exit fees
Alliance Trust £40 1.3% £12/quarter (plus 0.01%/year custody for international stocks) Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Italy, Netherlands, Norway, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, UK, USA £20/holding, plus £60 account fee
Halifax Share Dealing £11.95 1% 0.5% (min £31, max £120) Belgium, France, Germany, Italy, Netherlands, UK, USA £25/holding, plus £60 account fee
Hargreaves Lansdown £11.95 Up to 1.7% 0.5% (max £45) Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK, USA £25/holding
iDealing London Stock Exchange 0.1% (min £10) + £2.10 per fill, Euronext Paris 0.05% (min €5) plus €0.5 per fill, Chi-X 0.1% (min £10) plus £1.65 per fill, UK retail service providers £9.9/€14.5/US$19.5 Typically around 0.25%, although in my view smaller trades are likely to be around 0.5% £20/year Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK, USA £15/holding, plus £60 account fee
Interactive Investor £10 Apparently 1% (not stated on website, but given in recent promotion) £20/quarter account fee, offset against trading commissions (covers all accounts) Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Norway, Netherlands, Portugal, Spain, Sweden, Switzerland, UK, USA £15/holding, no account fee
iWeb Share Dealing £5 1% (increasing to 1.5% in March 2013) None (although there is a one-off £25 account opening fee) Belgium, France, Germany, Italy, Netherlands, UK, USA £25/holding, no account fee
Motley Fool Share Dealing £17.5 1% £30/year Belgium, France, Germany, Italy, Netherlands, UK, USA £25/holding, plus £60 account fee
NatWest Stockbrokers £20 Up to 2% £30 for accounts under £10,000, no fee above Australia, Belgium, Canada, France, Germany, Hong Kong, Ireland, Italy, Netherlands, Singapore, Spain, UK, USA £35/holding or £60 to transfer whole account
Saxo Bank Modern Wealth Management £9.95 UK, 0.15% (min £9.95) international None £35/year Belgium, France, Germany, Netherlands, Spain, UK, USA £25/holding
Selftrade £12.5 Up to 1.25% £10.5/quarter inactivity fee (covers all accounts) Belgium, Canada, France, Germany, Italy, Netherlands, Portugal, Spain, Switzerland, UK, USA £15/holding, no account fee
Sippdeal £9.95 Up to 0.5% None Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Norway, Netherlands, Portugal, Spain, Sweden, Switzerland, UK, USA £20/holding, no account fee
Stocktrade 0.75% (min £17.50, max £60) plus £20 foreign bargain charge plus additional £35 delivery charge for non-CREST eligible stocks Typically close to interbank rates 0.5% (min £30, max £180) Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Indonesia, Ireland, Italy, Japan, Malaysia, Netherlands, New Zealand, Norway, Philippines, Poland, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, UK, USA £15/holding, no account fee
TD Direct Investing £12.5 Up to 2% £36 for accounts under £5,100, no fee above Australia, Belgium, Canada, France, Germany, Hong Kong, Ireland, Italy, Netherlands, Singapore, Spain, UK, USA £35/holding or £60 to transfer whole account
The updated cost estimates are shown in the table below. I’m using relatively small trade sizes, to reflect an investor drip-feeding regular new amounts into the market. For those who already have large funds built up in previous years’ ISAs, the costs will be different and the size of the FX margin will become increasingly important. Aside from the low-cost providers below who don’t implement a significant FX mark-up of their own, it is possible that traditional stock brokers such as Charles Stanley could also prove competitive for investors with large portfolios.
ISA A - invest £940/month ISA B - invest £2,820/quarter ISA C - invest £11,280/year
Alliance Trust* £686 £366 £246
Halifax Share Dealing** £313 £217 £181
Hargreaves Lansdown £380 £285 £226
iDealing £195 £116 £86
Interactive Investor £233 £193 £193
iWeb Share Dealing** £173*** £133*** £118***
Motley Fool Share Dealing** £353 £213 £160
NatWest Stockbrokers** £467 £306 £246
Saxo Bank Modern Wealth Management £154 £75 £52
Selftrade £279 £179 £185
Sippdeal £176 £96 £66
Stocktrade* £509**** £224**** £139****
TD Direct Investing** £376 £276 £238
*Alliance Trust and Stocktrade are telephone dealing services – the others allow most international stocks to be traded online
**The Motley Fool and iWeb services are white labels of Halifax (with different charges that are cheaper in some circumstances), while NatWest Stockbrokers is a white label of TD Direct Investing (and is generally more expensive)
***iWeb’s FX margin is scheduled to rise to 1.5% in March 2013, which would increase costs to £229, £189 and £174 respectively, but so far, the Halifax and Motley Fool brands for this service are not indicating that their FX margin will increase in line
****Stocktrade costs will rise by £35 per trade for stocks that can’t settle in CREST (this won’t affect most major US and European ones, but will apply to most other international markets) – costs would become £929, £364 and £174 respectively