EXCLUSIVE Freetrade launches fee-free fund dealing: Investing app expands choice for investors
Products featured in this article are independently selected by This is Money's specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence.
Freetrade has launched fee-free fund dealing on its DIY investing platform, This is Money can reveal.
The move gives investors on the app-based investing platform access to mutual funds, open ended investment companies and unit trusts for the first time.
Freetrade, which was recently taken over by IG, said fund dealing will be commission free and only fund providers' management charges will apply.
However, only a limited range of funds will be available, initally 25 from Vanguard and then 'several hundred' of the most popular funds among UK investors.
Above its free basic general investment account, investors using Freetrade* pay a monthly subscription fee in different tiers.
Funds will initially only be available for 'plus' subscribers, who currently pay £9.99 per month. The firm said funds will also become available to standard subscribers, paying £4.99 per month, 'in the coming weeks'.
Some traditional brokers like Hargreaves Lansdown* and Fidelity* also offer fee-free fund dealing, but charge an account fee as a percentage of funds held.
Other rivals charge for fund dealing and carry either a percentage charge, such as AJ Bell*, or charge a subscription fee, such as Interactive Investor*.
> Read our full guide to investment platforms and their charges
Most free investing apps, such as the likes of Trading 212*, Etoro* and InvestEngine* do not offer investment funds, limiting investors to to ETFs, shares and bonds.
In the UK, investment funds account for some £1.5trillion of assets under management, and make up the largest asset allocation held in Isas and self-invested personal pensions.
Among the big traditional investment platforms, Interactive Investor* stands out as offering a similar subscription system to Freetrade*, with its basic plan costing users £4.99 per month with a £3.99 dealing fee on funds.
> Interactive Investor review: How does it compare to rivals?
Viktor Nebehaj, Freetrade's chief executive, said: 'Funds are one of the UK's most popular investment products, yet until today consumers are still forced to pay fees that grow with their assets and wade through outdated digital experiences.
Nebehaj added: 'We're changing that - with no fund holding fees and commission fees and a digital-first experience built for the modern investor.
'Whether you prefer to pick your own stocks or let fund managers handle investment decisions, you can now do it all in one place with Freetrade.'
Freetrade said offering access to funds is part of its 'mission to support long-term investing'.
It said: 'The launch taps into growing demand for simplicity, value, and transparency in investing - particularly among younger investors who feel underserved by legacy platforms.'
Freetrade says current fees charged by its competitors, based on assets under management, will eat into investors' portfolios over time.
What funds will Freetrade offer?
Upon launch, Freetrade will offer around 25 Vanguard funds and model portfolios, but said this will be expanded to several hundred of the 'most popular and widely held funds on the market' over the coming weeks.
Freetrade says it will also introduce fund transfers so that clients can transfer their holdings of any fund investments they have elsewhere. It has created a waiting list for users to indicate the funds they would like to transfer to Freetrade from their current providers.
To invest in funds, 'plus' subscribers will have to access their Freetrade account online for full functionality, rather than using the smartphone app, where they will be able to see their fund holdings but not make trades.
Online trading platform IG Group purchased Freetrade for £160million back in January.
Breon Corcoran, chief executive of IG, said at the time: 'This is a rare opportunity to strengthen IG's UK trading and investments offering and broaden our target addressable market.'
Compare the best DIY investing platforms
Investing online is simple, cheap and can be done from your computer, tablet or phone at a time and place that suits you.
When it comes to choosing a DIY investing platform, stocks & shares Isa, self invested personal pension, or a general investing account, the range of options might seem overwhelming.
> This is Money's full guide to the best investing platforms
Every provider has a slightly different offering, charging more or less for trading or holding shares and giving access to a different range of stocks, funds and investment trusts.
When weighing up the right one for you, it's important to to look at the service that it offers, along with administration charges and dealing fees, plus any other extra costs.
We highlight the main players in the table below but would advise doing your own research and considering the points in our full guide to the best investment accounts.
Platforms featured below are independently selected by This is Money's specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence.
Fidelity * 0.35% on funds £7.50 per month up to £25,000 or 0.35% with regular savings plan. Free £7.50 Free funds £1.50 shares, trusts ETFs £1.50 More details
Freetrade * Basic account free, Standard with Isa £5.99, Plus £11.99 Stocks, investment trusts and ETFs. No funds Free n/a n/a More details
Hargreaves Lansdown * 0.45% Capped at £45 for shares, trusts, ETFs Free £11.95 Free Free More details
Interactive Investor* £4.99 per month under £50k, £11.99 above, £10 extra for Sipp Free trade worth £3.99 per month (does not apply to £4.99 plan) £3.99 £3.99 Free £0.99 More details
InvestEngine * Free Only ETFs. Managed service is 0.25% Not available Free Free Free More details
iWeb Free £5 £5 n/a 2%, max £5 More details
Trading 212* Free Stocks, investment trusts and ETFs. Not available Free n/a Free More details
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