Finding Your ETF Platform

November 21, 2014

 

In September, services provider Dunstan Thomas conducted a poll of 105 advisers in the UK, which found that nearly a third of respondents wanted to see more exchange traded funds (ETFs) on platforms.

This sentiment was echoed more recently, when ETF.com spoke to Adam Laird, passive investment manager at online broker Hargreaves Lansdown, about picking a platform and how to trade on them. He believes that while there is abundant choice, it is not a saturated market.

Laird will be offering more sage advice on the matter at our Virtual Conference on Tuesday 2 December in the session on ETF Practice Management: From Platform Selection To Trading & Execution.

However, he did tell us that the point of a platform is not just to hold assets, but also to execute some administrative functions that individuals struggle with. Therefore the best thing is to call customer support, ask the relevant questions and find out who can assist you.

Platforms offering a multitude of services have helped drive costs down, but this additional choice has not saturated the market.

We take a combination of data from The Platforum and ETF.com to draw up a (non-exhaustive) list of which platforms offer what.

Hargreaves Lansdown: One of the biggest retail platforms, it charges ETF dealing costs at £11.95 per trade, but if you trade more than 10 times per month the costs go down.

Cofunds: Incidentally, Cofunds is the largest adviser platform by assets (£67.32 billion), but it does not offer ETFs directly after scrapping its pilot scheme to introduce them in partnership with Barclays Stockbrokers.

One of the reasons the UK has been so slow to take up ETFs is because of the history of platforms like Cofunds. Traditionally the market has been geared-up for funds, not securities, and therefore platforms are designed for funds, not trading securities, which is where the issue lies for ETFs.

Fidelity Funds Network: The platform started offering ETFs in 2012, but only offers 50. It has assets of £51.72 billion.

Nucleus: This adviser-owned wrap platform holds £7.16 billion of assets. Launched in 2006 by a group of seven financial adviser firms, the platform provides access to a range of tax wrappers and over 6,000 different assets. It offers unit trusts, open-ended investment companies, cash, equities, investment trusts, venture capital trusts, and ETFs. It also offers other securities such as gilts and corporate bonds.

Ascentric: This wrap platform was launched in 2007 and has £8.04 billion in assets. Since inception, it has offered ETFs and trackers, culminating in at least £400 million in ETFs alone on the platform (since the end of 2013).

Transact: It has £16.22 billion of adviser assets and was allegedly the first to launch a wrap service in the UK in 2000, utilising technology and systems already developed and pioneered in Australia, where wraps were originally developed. It announced earlier this year that it was going to halve its trading charges and buy commission for two consecutive years following a profitable 2013.

Parmenion: This discretionary fund manager and platform has £1.11 billion of adviser assets. It provides passives, actives and blended strategies, which invest in a selection of third party funds to create a “fund of funds” model. Its investment mantra is to target lower than average volatility with higher than average returns. Last year it saw 60 percent of fund flows invested in the passive model, while 40 percent had been invested in the active model.

AJ Bell Investcentre: It has £14.81 billion in adviser assets and an unbundled charging structure, which is an annual custody charge linked to asset values tiered from 5 to 20 basis points. Its online system aims to make it as simple and cost-effective as possible for investors to tailor the optimum investment strategy.

Novia: With £2.69 billion in adviser assets, Novia is another platform that has its own discretionary fund management service (Copia Capital Management) on its platform specialising in a passive, fund of funds model. Model portfolio functionality has been the driving force behind the growing distribution and sale of ETFs among advisers.

Praemium: It has £540 million in assets. Its Separately Managed Accounts (SMA) platform (formerly BlackRock CPS) utilises the expertise of model managers without having to buy units in a fund.

Raymond James: This open architecture platform, built on the back of [BNY-Mellon owned] solutions provider, Pershing, has £4.06 billion in assets. It is also a member of the London Stock Exchange, so can execute trades as and when.

7IM: This fund management firm has its own platform run by its CEO, Tom Sheridan, with its own model portfolios on it.

Standard Life: With £21.46 billion in assets, it also offers its passive MyFolio fund range.

AXA Elevate: A fund platform that offers its own fund group’s (Architas) passive funds on wrap.

Aviva: £3.78 billion on its platform, its investment range includes over 2,800 funds from around 90 fund managers, equities, investment trusts, unit trusts, structured products and ETFs.

Equiniti: The platform offers firms services including share registration, company administration, settlement services and financial custody. It also has links to the platform Selftrade, as well as running its own dealing service called ShareView, where trades cost £12.50 per trade.

Nutmeg: The all-ETF platform was founded in 2011. It is unclear what assets it has on its platform.

 

 

 

 

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