SCM Private recently launched three new online lifestyle-orientated portfolios aimed at investors who have been cut off by the Retail Distribution Review (RDR) from gaining affordable independent financial advice and the best investment products.
The goal was to move away from the traditional business-to-business model and instead focus on a direct-to-consumer approach. The ultimate aim was to end the investment gap and fill the void with new low-cost investment websites that deliver fair, clear, modern, transparent and engaging solutions that speak to investors in a language they can understand.
The investment management company has done this by offering three pure exchange traded fund (ETF) portfolios, through different websites for different customer audiences in a variety of ranges: three core portfolios, three blended portfolios and three currencies (sterling, dollar and euro). All of which have a minimum Investment level of £15,000, which is the new individual savings account (NISA) limit.
The difference with this new approach is that ETF investing has, arguably, been made easier to access. The focus of these websites is for the public to learn about investing easily and understand how it can work for them.
One of the best tools put on all three sites is the portfolio simulator where you can test your investing skills by putting in the amount you want to invest and comparing the products on offer. This does of course include SCM’s own branded portfolios, but they also compare these to wealth managers (using data from corporate advisory house Numis) and there is also an option to input your own data. The simulator then estimates an individual's total charges and profits in sterling before they invest.
SCM Private has been fierce in its bid to educate the retail sector about investment. It launched its ‘True and Fair Campaign’ three years ago, which called for total transparency on costs and fees and a better deal for investors.
ETF.com speaks to Alan Miller, co-founder and chief investment officer of SCM Private, who will be a speaking at our Virtual ETF Conference on 2nd December, about what investors should know when investing in ETFs and whether online investing is the future.
[Miller will be one of the speakers at our virtual conference on Tuesday 2 December for the session on Exchange Traded Funds 101: Basics & Fundamentals. Sign up here and don’t forget to join us on the day.]
ETF.com: What are the important things investors coming to ETFs for the first time should know?
Alan Miller: The most important thing to understand is what the ETF actually invests in – the particular market, the type of equities or bonds, the way the index is constructed. The decision between the ETF provider, the ETF structure, the various costs and accuracy with which the ETF tracks its index should be decisions that take place after deciding exactly what it is you want to invest in otherwise the tail is wagging the dog.
It is important in ETFs, like any investment, to try and balance risk, return and cost to make the best decision rather than get obsessed with just one of these aspects.
ETF.com: How can investors learn more about investing with ETFs?
AM: We have guides to ETFs on our websites: SCMDirect.com, SCM50.com, MoneyShe.com together with links to a guide on ETFs provided by the London Stock Exchange. We also give investors access to our knowledge centre which includes general insights into the world of investing and interesting academic and other articles on investing.
ETF.com: How do ETFs work in portfolios and why has this been a boon to investors?
AM: ETFs are a fantastic tool for anyone wanting an efficient, well spread, low cost and liquid portfolio. They have democratised the world of investment by offering institutional quality investment and costs to retail investors in a transparent and efficient medium.
The ETF is the modern equivalent of a smartphone as compared to the mutual fund which is more like the old fashioned telephone that people used to rely on.