Fund supermarkets reviewed: Fund supermarkets - how to invest in cheap funds The services fund supermarkets offer
When considering investing through a fund supermarket, it's vital to weigh up the balance between cost and service as these considerations could have a big impact on your long-term investment returns.
Fund supermarkets: how service levels differ
Low cost, 'no frills' fund supermarkets
There are more than 20 investment brokers in the UK and, while all offer DIY investors 'execution-only' services without advice, some provide more than others when it comes to bells and whistles that might help you reach informed decisions.
Cavendish Online is a prime example of a 'no-frills' broker, offering a low-cost, basic service, with limited assistance to help you choose funds. We haven't included it among our reviews however, because too few members use it to provide a reliable customer score. Other low-cost brokers, that offer share dealing as well as funds, include AJ Bell Youinvest and Charles Stanley Direct.
Premium fund supermarkets
Alternatively, lots of brokers provide a investment research and analytical tools to help you make decisions on which funds to buy. Hargreaves Lansdown, Interactive Investor and Fidelity Personal Investing fall in this category. Each offers a website rich with investment data and slick research tools.
Other features that premium fund supermarkets provide include example portfolios, fund suggestion lists portfolio analysis tools.
Fund supermarkets: costs to watch out for
When investing through a fund supermarket, the ongoing charges displayed by a fund managers are not the only ones to consider.
New rules introduced in 2014 mean that fund supermarkets must now charge a separate fee for their services. These come in two forms: flat, fixed fees and percentage fees.
Hargreaves Lansdown set the bar with a headline fee of 0.45% and a host of additional administrative charges. Fidelity then undercut its rival, with a charge of 0.35%, only to later introduce a minimum £45 fee for anyone with less than £7,500.
Charles Stanley Direct and AJ Bell Youinvest then introduced charges of 0.25% and 0.2% respectively.
Some brokers have instead chosen to levy fixed annual fees in pounds and pence. These include Interactive Investor, which charges £80 a year for a stocks and shares Isa, Alliance Trust Savings, which charges £90, and The Share Centre, which charges £57.60.
But watch out for additional charges and dealing expenses. Unlike most brokers that charge percentage-based service fees, Alliance Trust charges up to £12.50 to switch funds online, while Interactive Investor charges £10. AJ Bell Youinvest charges £4.95 for fund dealing.
Some fund supermarkets also charge for taking money out or closing your account.
Fund supermarkets: what extra services do they offer?
Fund supermarkets provide execution-only services, meaning you make your own investment decisions.
But some of these brokers also offer regulated financial advice for an additional fee. Hargreaves Lansdown, for example, runs its fund supermarket, Vantage, offering clients generic information through regular newsletters and online updates, as well as the standard fund data.
But investors who do want individual advice can contact an adviser and obtain this for an extra fee. Bestinvest also offers advisory options.
Fund supermarkets reviewed
To help you find the right fund supermarket, Which? has created unique review pages for 15 of the major providers in this market. Our reviews tell you how the different companies charge, and this is complemented by our unique customer satisfaction ratings, in which over a thousand Which? members have rated fund supermarkets for customer satisfaction and other aspects of this service.
- What should you invest in? - take a look at your options
- Should you invest your own pension? - find out more about Sipps
- Which Money Compare tables - to compare hundreds of cash Isa deals
Which? Limited (registered in England and Wales number 00677665) is an Introducer Appointed Representative of Which? Financial Services Limited (registered in England and Wales number 07239342). Which? Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Registered office: 2 Marylebone Road, London NW1 4DF.