ISA Stocks & Shares Platforms

mduefy

Hi

Platforms for beginners question...

I'm new to investing in S&S ISA's, having previously had cash ISA's.  I've just done the Rebel Finance course & looked at websites such as monevator etc to try & educate myself, but have just ended up confused !

Just wondering whether it is advisable for beginners to stick with platforms such as Hargreaves Lansdown, rather than platforms such as T212 / invest engine which are fee free platforms. 

I'm looking to transfer at least 100K of cash ISA's across to S&S ISA's, so wondering if it is better from customer support point of view etc to go for platforms such as Hargreaves Lansdown / AJ Bell, or if the cheaper platforms should be ok for someone who has never invested in S&S ISA's ?

I've just managed to confuse myself even more !

Thanks for any advice !

eskbanker

Best thing to do is to establish what you want to invest in, prior to deciding where to hold it - the decision about actual investment choice is typically a far more significant one than platform selection, and, perhaps more importantly, influences it....

Albermarle

The platform you use is much less important than the investments you hold in the S&S ISA.
Some platforms have a restricted range of investments available, and some have a much wider range.
So you need to decide on what investments you want to have first, before looking at the most suitable platform to hold them on.

mduefy

Thank you both.  I was thinking about a Vanguard developed world / global all cap / dev world exc UK type fund / ETF as they were the ones most frequently mentioned.  From what I've seen, the ETF options have lower platform charges generally.  Just looking for a diversified option when starting out

jimjames

You raise a good point that price isn't everything and that service is also a component to consider especially when you are a new investor. There is a thread on here about T212 and the problems someone has with getting support so it's definitely worth taking account for your choice of platform

Alexland

mduefy said:

I'm looking to transfer at least 100K of cash ISA's across to S&S ISA's, so wondering if it is better from customer support point of view etc to go for platforms such as Hargreaves Lansdown / AJ Bell, or if the cheaper platforms should be ok for someone who has never invested in S&S ISA's ?

First consider if it's more beneficial to make higher pension contributions.

Then consider iWeb (owned by Lloyds/Halifax) for your S&S ISA as they have £0 ongoing charge, give access to thousands of investment choices inc Vanguard products and it only costs £5 to trade. Ideal for large accounts with infrequent trading activity.

https://www.iweb-sharedealing.co.uk/

If you are still under 40 then consider putting £4k each tax year into a S&S Lifetime ISA for a £1k bonus. Consider Dodl (owned by AJ Bell) as they only charge 0.15% (min £1 pm) and after a few years once the account is big enough consider transferring it to the main AJ Bell platform for capped charges on holding an exchange traded investment. Dodl offers a limited fund range but it includes good ones. The main AJ Bell platform offers loads of choice similar to iWeb.

https://www.dodl.co.uk/lifetime-isa

mduefy

Sadly just over 40.  Will take a look at iweb.

dunstonh

 I was thinking about a Vanguard developed world / global all cap / dev world exc UK type fund / ETF as they were the ones most frequently mentioned. 

Two of those funds would need to have multiple funds held.  One of those funds wouldn't.   

 From what I've seen, the ETF options have lower platform charges generally.  

That is because there is lower consumer protection.  Consumer protection costs more.

mduefy

Sorry if this is a dumb question, but what do you mean by 2 of the funds would need to have multiple funds held and one wouldn't?

Alexland

mduefy said:

Sorry if this is a dumb question, but what do you mean by 2 of the funds would need to have multiple funds held and one wouldn't?

I think dunstonh is suggesting if you held a fund that excluded Emerging Markets (eg Developed World only) or UK (exc UK) or Small Cap (not All Cap) then you would "need" more fund(s) to add them back in again.

That would of course only be the case if you wanted to end up with a portfolio that included all those things which of course some people don't as we might make a specific choice to not own some things in our portfolio.

For example comparing the 5 year return on an accumulating All World ETF (VWRP) at 68% with the 5 year return on a Developed World ETF with similar fees (SWDA) at 78% then it's evident that these seemingly modest decisions around what to include in the global tracker make a difference to performance one way or another. Of course it could have so easily been the other way around.

If you are new to investing £100k into a global tracker are you OK that it might crash to around £50k and take many years to recover? Or would you prefer a smoother ride with a multi asset fund which blends in fixed income bonds and maybe other asset classes for less volatility?

dunstonh

mduefy said:

Sorry if this is a dumb question, but what do you mean by 2 of the funds would need to have multiple funds held and one wouldn't?

Two of the funds are not aimed at people looking for single fund solutions.  They are aimed at those looking to blend with other funds in a portfolio.

 Vanguard developed world, as its name indicates, only has developed economies.  This fund would typically be held alongside an emerging markets fund, allowing you to choose the ratio between developed and emerging.

dev world exc UK is similar to above by having an emerging markets fund to run alongside it but also a UK equities fund as well.   This allows investors to decide how much home bias they want to run, along with how much the ratio of emerging and developed should be.

global all cap can be held by itself but it follows a particular criteria.  As do all tracker funds.  In this case, it is global and is all cap.  It includes developed, emerging and UK.    In recent years, it has under performed All World and Large Cap but who knows what the future will bring....

Passive funds track a benchmark at low cost but it doesn't mean they are all the same.  Each has its own management decisions on what they benchmark and what they do or do not include.  There are something like 155 FTSE benchmarks alone.  You also have MSCI and other benchmark providers.

It is a bit of misconception that passive funds have no management decisions because ultimately, you pick the passive funds to match the benchmark(s) you prefer and the weightings used with each.    Those are management decisions.   i.e. if you believe that emerging markets should be underweight then that is not much different to a fund manager making that decision.   If you pick a developed tracker ex UK fund and hold it by itself, then you have made a management decision to be underweight in UK and Emerging Markets by fully excluding them.   

If you are looking for a single fund solution that is 100% equities then select an appropriate benchmark.