Scottish Widows free Regular Investing review.

Rollinghome

For anyone who hasn't use Scottish Widows/Iweb free "Regular Investing" yet, I thought a review might be useful.

I've used it a few times for mopping up small divis but have noted that SW frequently execute orders very soon after the LSE opens. "Trading the open" can be profitable for experienced traders but comes with some risk, especially if done blind-folded. So although it's great for funds that are priced just once daily, it can be hit and miss for equities, including ITs.

I used it today to re-invest a very small IT divi that Mrs R had lying in her ISA. The opening uncrossing trade pushed the price 1.8% higher than the closing UT last night and her trade was executed within a whisker of that price just 10 minutes after the markets opened. Was by far the highest price of the day before falling back to the previous day's closing UT a few trades later.

The same has happened a few times now so while they can't be expected to use other than random times throughout the day, I'm surprised that they don't delay investing until prices are likely to be more stable. There doesn't seem to be a stated limit on how much can go through as a regular investment, so fine for equities with very small sums but could work out costly for something larger.

masonic

That's disappointing. As you say, most services wait at least an hour or two after market open before triggering.

Rollinghome

I thought Iweb did. I'm sure I read it somewhere on their site about at-best orders to explain why they might not catch the best price if it happened very early. Seems not so for their regular investing. The trade was executed at 8.10 am as part of a bulked order.

I see that Invest Engine only offer bulked orders but say they are done around 2.00 pm. But that's presumably for ETFs

masonic

InvestEngine do that for all orders, not just regular investment. It is how they keep their costs down. I like having the ability to place an individual market order and getting a quoted price.

Rollinghome

And I assume InvestEngine still only offer ETFs that don't have those wild gyrations when markets open.

Hint to SW: Could you avoid regular investments being executed during the wild-west hour when markets open please and, if not, include a warning?

equitydealer

I use Lloyds for my ISA and SIPP and the free regular investment service, the trades happen between 10am and 12pm most the time for the ETF I invest in. Strange that the regular investment deal execution time is so early in the morning for Scottish Widows as they both use Halifax share dealing as the underlying platform and I assume the same bulk order processing.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81973763#Comment_81973763

iWeb never had regular investing in the pre-SW days, so presumably it is not piggybacking on the same processing.

Rollinghome

To be clear, SW hasn't been consistently that early. Several of the dozen trades I've done were, but others have been at various times and one was after 4.00pm. All ITs, none ETFs.

They must understand the problem so I don't understand why they do it. Anyone in that bulk trade for more than £280-worth could have found themselves worse off than if they had used a standard £5 trade.

EthicsGradient

Is this a fact that has been statistically proved - that prices are significantly more volatile in the opening minutes of a market (which, although not loss-making, overall, might make investors nervous)? Or that they're higher on average than at later times of the day?

If it's not an established fact, then it's not really a problem they should be actively trying to avoid.

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81973879#Comment_81973879

Higher, no (or we'd only ever sell first thing!). But I think volatile yes, though I can't remember where I saw that analysis - bid-spread is notably larger too.

masonic

It's pretty much all down to wider spreads, so hits you both ways.