A new investment website has launched offering low-cost options to people with £10,000 to invest, which could suit beginner investors.
Exo Investing uses so-called exchange traded funds, or ETFs, to offer low-cost investment portfolios to users. These funds track the progress of a given asset or stock market such as gold or the FTSE 100.
These tracker funds are commonly used by online investment sites because they are cheaper than other funds, which helps the robo-advice sites keep their prices competitive.
But, unlike many robo-advice websites, Exo says it does not simply offer a limited choice of pre-chosen investment portfolios. Instead, each user gets a “truly personal portfolio” chosen from more than 500 ETFs, depending on their investment objectives and how much risk they are willing to take.
Many robo-advice websites have a limited selection of portfolios, say four or six, which are compiled to suit different aims and risk levels. This helps them keep the cost down for investors through the economies of scale, but may mean users struggle to find a portfolio that perfectly suits their needs.
Like other sites, Exo’s portfolios are monitored daily by computer algorithms, but it says its own are continually tweaked to manage what is happening in global stock markets, whereas rivals may only review portfolios on a set basis, typically every three or six months.
Users will be able to make changes to the risk level or aims of their investment portfolio at any time for no extra cost, Exo adds.
Lennart Asshoff, chief executive at Exo Investing, says: “This level of individually tailored portfolio and risk management has never been available to the private investor before. Exo is all about breaking down the barriers to wealth and opening the door to a new category of investing for as many people as possible.”
How do fees compare?
Total fees to use Exo start at 1% and fall to 0.75% for those investing more than £100,000. This is made up of an of an annual management fee of 0.5% to 0.75% and an ETF fee of 0.25%. While Exo promises personalised portfolios, there are cheaper options for investors looking for online options.
Evestor, for example, offers services with total fees as low of 0.5% to 0.53% (broken down into a 0.35% annual management fee and a 0.15% to 0.17% ETF fee), while ETFmatic charges a total of 0.39% to 0.63% (made up of a 0.29% to 0.48% annual management fee and a 0.1% to 0.15% ETF fee). These platforms allow people to start investing with just £1 and £100 respectively.
Meanwhile, Scalable Capital and Investec Click & Collect also start with a minimum £10,000 investment and have total fees starting at just 1% (a 0.75% annual management fee and a 0.25% ETF fee) and 0.95% (a 0.75% annual management fee plus a 0.25% ETF fee) to 1.25% (a 0.35% to 0.65% annual management fee and an average 0.6% ETF or fund fee) respectively.
As robo-advice sites generally use ETFs, investors who would prefer their money invested in other types of funds may want to consider Investec Click & Invest, which invests in active funds.