Investment doctor: "Which investment platform offers the best range of funds?"

Published by Edmund Greaves on 15 August 2018.
Last updated on 15 August 2018

A reader wants the widest variety of investment products and access to exchange-traded funds

The reader asks: Your guide to help beginners select an investment platform (in the June 2018 issue and online at Moneywise.co.uk/platforms-beginners) was very useful.

But I read that Hargreaves Lansdown – your top pick for smaller portfolios – has removed hundreds of funds and investment trusts to meet new EU regulations.

For that reason, I am in search of a platform that has a comprehensive coverage of funds, investment trusts and, most importantly, ETFs (exchange-traded funds).

I have set my eyes on Interactive Investor (Moneywise’s parent company) – your best buy for larger portfolios and frequent traders – and I would like to know its coverage in competition with others.

Initial diagnosis

It’s true that platforms have had to meet stricter regulations on the investment products they offer. But Laith Khalaf, senior analyst at Hargreaves Lansdown, explains that this has affected all fund ‘supermarkets’.

“At the beginning of this year, new European regulations came into force which required certain investment products to publish a Key Investor Document (KID) if they wished to be available to UK retail investors,” he says.

“Unfortunately, a number of investment trusts did not meet this requirement initially. This was something which was required across the industry by regulation, not just by Hargreaves Lansdown. If an investment covered by the regulations does not produce a KID, no UK investment service can offer it to its clients.”

Jason Hollands, managing director of business development at Tilney Investment Management Services, adds: “While most popular investment trusts and many ETF providers did provide this information, some did not do so on time and therefore all retail investment platforms were obligated to suspend access to them, so this was an industry-wide issue, not a case of one or a few providers choosing to be obstructive.”

“ETFs are a great low-cost option for long-term investors”

Treatment options

When it comes to picking a platform, Hargreaves Lansdown provides access to 3,850 open-ended funds (OEICs or open-ended investment companies), investment trusts and ETFs. Interactive Investor, meanwhile, provides access to 5,643 open-ended funds, investment trusts and ETFs.

Beyond OEICs, trusts and ETFs, the platform offering the widest variety of investment products is AJ Bell, according to platform analysis by Platforum.

However, you also need to take into account cost, access, ease of use and the suitability of the products offered.

Elective surgery

In addition to fund choice, you mention a particular interest in ETFs.

Moira O’Neill, head of personal finance at Interactive Investor, explains that these are a “great option for long-term investors” because they “increase the range of sectors or markets available, typically at a low cost”.

Mr Hollands adds that ETFs “can be useful in providing exposure to liquid markets, such as US equities, very cost-effectively”. However, he cautions that ETFs aren’t the only cheap option for investors.

He says: “The growth of the ETF market has helped fuel a parallel price war among traditional tracker fund providers, and so the good news is that often these can have costs as low, if not lower, than equivalent ETFs, but also with no stockbroking dealing fees.

"So I think if you want to invest passively, it makes sense to select between ETFs and open-ended (OEIC) funds on a case-by-case basis, seeking out the best deal, rather than being dogmatic about only using ETFs.”

Do you have a question for the Investment Doctor?
Email editor@moneywise.co.uk

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