The best value platforms for investment trusts

Added 10th October 2017

The most cost-effective platforms for holding and trading investment trusts have been identified by the Association of Investment Companies (AIC).

The best value platforms for investment trusts

Research by the trade body in conjunction with consultancy the Lang Cat, looked at the cost of holding portfolios of investment trusts between £25,000 and £1m on 17 different platforms, and the costs of trading them.

It split the charges into ongoing costs, such as those for administration or custody, and transaction costs for buying and selling investment trust shares.

The Lang Cat noted ongoing costs are generally levied as a percentage of client assets, though Alliance Trust Savings has a flat fee model. Two platforms, Ascentric and Seven IM, do not charge for trades, while Raymond James and Alliance Trust Savings offer a charging option where trades are included.

Otherwise, it said trading costs can be as little as £2 or as much as £25, or even more for large transactions.

The Lang Cat produced a heatmap (see below) showing the cost of investing portfolios ranging from £25,000 to £1m in size comprising 50% open-ended funds and 50% investment companies, with four transactions a year.

It found platform costs for maintaining a £250,000 portfolio range from 21 basis points at AJ Bell or Alliance Trust Savings to 62 basis points at Novia – a difference of more than £1,000 a year.

Hubwise appears to generally have the lowest annual platform costs, ranging from 0.15% to 0.26%. Meanwhile, Novia ranges from 0.39% for a £1m portfolio to 0.91% for a £25,000 portfolio.


The Lang Cat also ran a more ‘model portfolio-like’ scenario in which rebalancing occurred quarterly and the portfolio has 10 equally-weighted holdings, comprising nine open-ended funds and one investment company.

In this scenario, for a £250,000 portfolio the platform with the highest charges will cost the client more than double the cheapest. Costs range from 23 basis points with Hubwise to 53 basis points with Transact (see below).


Changing the assumptions further by shifting to a model portfolio with a 50/50 split between open-ended funds and investment companies, with five of each, the cheapest platforms for a £250,000 portfolio are AJ Bell Investcentre and Hubwise at 25 basis points and the most expensive is Aviva Platform at 90 basis points (see below).


Steve Nelson, head of research at the Lang Cat, said cost is only one aspect of a wider platform selection or due diligence exercise.

But, he added: “What we’ve found from our research with the AIC is that there is clear segmentation within the platform market.

"One of the original visions of the platform market was a wrapper and investment neutral environment. It’s fair to say it’s not quite panned out like that.

“However, if advisers are looking to include investment companies within an investment proposition, then there are a handful of platforms – typically those with in-house dealing desks – where trading costs are not a barrier.”

Nick Britton, head of training at the AIC, said: “We’re often asked by advisers which are the best platforms for holding investment companies. While best doesn’t always mean cheapest, we’ve launched this research with the lang cat to help advisers navigate what can be a complex array of charging options and work out which platforms will be most cost-effective for their clients.

“The good news is that investment companies are now available on more adviser platforms than ever before, and on 15 out of the 17 platforms where they are offered, can be held in model portfolios.

"However, not all platforms will be cost-effective for all clients, so care needs to be taken to choose the right one.”

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About Author

Sebastian joined Last Word Media in 2017 as editor of Portfolio Adviser. He previously spent 10 years as a journalist and editor in the UK institutional investment sector, most recently as editor of Portfolio Institutional. Prior to that, he held several roles at Professional Pensions which is part of Incisive Media.



Investment Strategy




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