UK fund supermarket comparison table

 
Last UpdatedOct 52015

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 or Alliance Trust Savings. You need to go to that broker to get access to its platform. In other cases, they are separate and the same fund platform (for example, Cofunds Retail) can be available through more than one broker.

To make matters even more difficult to understand, an increasing number of newer supermarkets outsource some services such as dealing, settlement and custody to third-party providers (for example, FNZ). With these supermarkets, the details of each provider’s service will be different, but some of the functionality will depend on what they outsource to this underlying provider.

The table below tries to simplify this by listing the major brokers that operate their own fund platforms, plus some of the cheapest brokers that give access to other platforms. It does not aim to be entirely comprehensive and deliberately leaves out many of the other brokers that simple rebadge the Cofunds Retail service, together a few other platforms that are too expensive, niche or generally undistinguished.

No supermarket is best for all investors, but certain firms stand out. If cost is your top priority, Cavendish and Charles Stanley Direct are usually a good option for the smallest portfolios, while iWeb (owned by Halifax, but with different charges) can be very cost-effective for medium-sized accounts and above. If the range of funds available is the most important consideration, AJ Bell Youinvest (relatively cheap) and Hargreaves Lansdown (more expensive) are a good place to look.

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Offshore fund supermarket comparison table

 
Last UpdatedAug 162013

The table below lists brokerages around the world that offer a range of mutual funds from different fund managers and are willing to accept non-resident clients. As a result, they may be useful to expat investors – or anyone else looking to invest offshore – in search of a convenient platform for buying funds.

Investors familiar with fund supermarkets in countries such as the UK and the US may be surprised by the relatively small number of funds available and by the fact that these companies do not offer reduced annual management fees on the funds through trail commission rebates (although most at least reduce or get rid of the entry fee). Unfortunately, straightforward multinational fund supermarkets offering a wide range of funds at low cost don’t really exist at present, for reasons discussed in this article.

Despite their limitations, these firms may well be cheaper and more convenient than purchasing funds directly from a fund management firm. And they are likely to be substantially cheaper and more flexible than the offshore investment bonds from life insurance companies that are aggressively sold to expatriates in Asia and the Middle East.

These fund supermarkets generally do not accept US citizens or residents and offer very limited choices to them if they do. This is a common problem for all US persons trying to open financial accounts overseas today, reflecting the reluctance of foreign firms to risk complications from Regulation S and now FATCA. In practice, investing in non-US mutual funds has tax disadvantages for US persons in any case and it may be better to invest in US funds through a US discount broker.

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Sep 072011
 

Keytrade Bank is now in the broker directory. It offers stock broking services for a decent range of European markets, but the main reason it’s likely to be useful is its fund supermarket.

This is a similar offering to Internaxx, but covers more funds (although the two don’t overlap entirely – there are funds on Internaxx that Keytrade doesn’t carry). With no custody fees it may well work out as cheaper than Internaxx over the long run.

To read more on the options for expats and others struggling to find a fund supermarket that accept non-residents, see the guide to offshore fund supermarkets.

Aug 192011
 

Most investors understand that the fees they pay to fund managers have an impact on their investment returns. But it’s easy to overlook quite how large that impact can be. It’s also easy to focus on the wrong fees – putting a lot of effort into reducing one, when it’s the other that matters more.

So exactly how much do fees matter and what should you do to cut costs? Let’s take a look at a real example.

Before we begin, let’s recap what fees we’re looking at. There are two different sets of fees that fund management firms normally charge. One is the entry fee or initial charge, a one-off fee levied when your investment goes into the fund. The other is the annual management charge, which is levied on a recurring basis.

There are some other possible fees to keep in mind. For example, an exit fee might be charged when you withdraw your money or a performance fee levied when returns pass a certain hurdle. But these are less common and so we’ll leave them out for simplicity.

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What is a fund supermarket?

 FAQs
 

Do you enjoy paying hundreds of pounds a year out of your investments to a middleman who does nothing to help you? Almost certainly not. Few people do.

Yet if you’re buying your funds the wrong way, that’s exactly what you’re doing. If you’re investing directly with a fund manager or through an traditional broker, you are almost certainly paying far more in fees than you should.

For most investors, the best way to buy funds is to use a fund supermarket and a discount broker. Doing this could save you a great deal of money and also make managing your investments much simpler.

Let’s take a look at what these firms do, how it all works and how much you can save.

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