We take a look at how the new Investec online platform offering affordable access to actively managed investments stacks up.
Investec Wealth & Investment (IW&I) has launched a new actively-managed online investment service called ‘Click & Invest’.
The new platform is meant to rival low-cost 'robo investing' services, which are effectively automated software programmes that passively track the market.
Unlike its robo rivals, Click & Invest aims to offer a more tailored service using experienced investment managers offering ‘restricted advice’ with the aim of outperforming the market for better returns.
Here’s what you need to know.
What’s on offer?
Click & Invest is offering a Stocks & Shares ISA or a General Investment Account, which can be opened with a lump sum of at least £2,500.
Right now there isn’t a self-invested personal pension (SIPP) option, but there are plans to offer one soon.
How it works
Click & Invest uses a thorough application process to ensure your attitude to risk, investment goals and ability to absorb losses are determined before investing.
Investec’s platform will ask you to fill in a questionnaire that will help it judge the risk appetite and investment goals before offering a strategy.
There are five different risk-based investment strategies you could be linked to: Defensive, Cautious, Measured, Adventurous and Aggressive.
From there, a team of investment managers create and actively manage portfolios on behalf of clients.
There are over 300 actively managed funds, which are assessed by a team of 22 in-house researchers and reviewed monthly with the aim of outperforming the market.
Investors will be able to see how funds are performing via the website, through the Investec App or by calling the Click & Invest support team.
They also receive monthly video updates from their investment managers about how their portfolio is performing and any changes that have been made on their behalf.
What sort of advice do you get?
Click & Invest offers simplified advice which is officially known as 'restricted advice'. This is more detailed than execution-only and guidance but a step below full advice.
Restricted advice means the Investec team can only advise you on investment management rather than retail investment products like life policies.
The advice is based on your attitude to risk, capacity for loss and the amount of money you would like to invest. This means your overall current financial situation or any investments you may already hold won’t be considered.
Click & Invest fees and charges
Investec’s Click & Invest service charges an annual management fee, which is tiered according to the level of money you put in.
You’ll pay:
- 0.65% on the first £100,000 invested;
- 0.50% on the next £150,000 invested;
- 0.35% on anything over £250,000.
Investors won’t be charged for setting up and creating a portfolio, commission, transferring in, withdrawing money or closing an account.
However, as with other online investing platforms, there are underlying fund charges, which are applied by the individual fund managers like Vanguard, Blackrock and JP Morgan. These average 0.6% with Click & Invest, but are deducted directly from the value of your investments.
So, the ongoing annual fee on a Click & Invest £10,000 investment would be 1.25% (0.65% plus 0.6%) or £125 a year.
How Click & Invest compares
Investec’s Click & Invest prices can be beaten by low-cost robo investing platforms, which offer ‘execution-only’ services that consist of passive index-tracking funds.
For example, Nutmeg’s fixed allocation portfolios charge 0.45% on the first £100,000 invested and 0.25% thereafter, with an underlying fund cost of 0.17%.
So, the ongoing fund charge on a ready-made portfolio would be just 0.62% on a £10,000 investment or £62 a year.
However, these deals only track the market, while Click & Invest aims to beat it using real investment manager expertise and researchers.
When comparing Click & Invest to other ‘restricted advice’ services there is a noticeable premium.
Nutmeg’s fully-managed portfolios charge 0.75% on the first £100,000 invested and 0.35% thereafter with underlying fund costs averaging 0.19%.
The ongoing Fund Charge on a £10,000 investment would be 0.94% compared to 1.25% with Investec’s Click & Invest service.
How safe is your money?
As with any investment there is the risk you may get back less than you invested.
However, Investec’s Click & Invest service is regulated by the Financial Conduct Authority and covered by the Financial Services Compensation Scheme. This means the first £50,000 of your investments are protected if the investment platform goes bust.
Is it worth investing?
Click & Invest aims to give those who wouldn’t normally be able to access expensive traditional wealth management services a chance to get a more tailored experience with their investments for a reasonable cost.
What’s more Click & Invest doesn’t just passively track the market like other low-cost platforms, which means there’s a chance you could get better returns on your investments.
It’s worth noting that there is an ongoing debate over whether it’s worth paying a premium for actively-managed funds, with research suggesting that passive funds tend to perform better when the markets are up.
As with all investments, past performance is no indication of future returns.
Ultimately you will need to consider your attitude to risk, whether you can afford the premium and make sure you have a balanced portfolio.
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