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FE launches online platform Trustnet Direct

Today marks the official launch of FE’s low-cost fund supermarket, offering access to more than 6,000 equities, open-ended funds, ETFs and investment trusts.

By Alex Paget, Reporter, FE Trustnet
Monday March 10, 2014


FE has launched its own retail investment platform, Trustnet Direct, offering investors the chance to invest in funds, investment trusts, ETFs and equities at a low cost.

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The site offers extensive tools and information, drawing on FE’s ratings and data to help retail investors achieve their financial goals.

John Blowers, head of Trustnet Direct, says the platform will offer an easy-to-use website that helps bridge the current “advice gap” in the financial services industry.

“DIY investing can be a daunting task and many investors who have historically sought advice from an IFA in their local bank branch now find themselves on their own in the so-called advice gap,” Blowers said.

“As a trusted provider of information to the investment community for almost two decades, we’ve worked hard to order this information into a format that is readily accessible by any retail investor.”

Blowers says that Trustnet Direct will offer investors access to more than 6,000 direct equities, open-ended funds and investment trusts.

Trustnet Direct's platform fee is 0.25 per cent, capped at £200 per annum, with a minimum of £20, which is guaranteed until February 2017, and there is a charge of £10 per trade, falling to £6 for frequent traders.

Regular investors, for example those who drip-feed monthly, will pay only £2 per trade.

Blowers says that Trustnet Direct only offers commission-free, or “clean” share classes. He adds that investors currently in “dirty” share classes with a competitor will be converted in to “clean” ones free of charge if they decide to switch to the new platform.

He continued: “It’s clear investors are increasingly aware that low interest rates and a resurgent equity market mean that their savings shouldn’t simply be left on deposit.”

“However, the fact that such a huge swathe of the population has been disenfranchised from investment advice in the wake of RDR shows there’s a big, untapped market here.”

“The industry is evolving to meet that need and we have seen a number of price changes in recent weeks as a consequence. We are providing the most transparent fee structure possible and underline our commitment to maintaining this; we will guarantee the platform fee until at least 2017.”

The distinguishing selling point of Trustnet Direct, according to Blowers, is that it offers investors access to FE’s expert research and analytical data.


Blowers (pictured) says there are a number of tools on the website that investors should look at first.


The Trustnet Direct Portfolio – The first is the Trustnet Direct Portfolio page, which allows investors to build, analyse and change their portfolios.ALT_TAG

“The Trustnet Direct Portfolio contains some powerful analysis tools to help you get the best from your investments. Other analysis tools, such as charting and a health-check facility, will be coming online soon,” Blowers said.


Trustnet Direct Top 100 Funds – The next is Trustnet Direct Top 100 Funds, which Blowers says draws on the expertise and knowledge of Rob Gleeson’s FE Research team.

“We have used the FE Research team to create a list of circa 100 funds that represent the best-performing in the market covering the key sectors. Account holders get access to FE Research extracts on these funds.”

Performance of fund vs sector and index over 3yrs


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Source: FE Analytics

Some of the notable funds on the list include Artemis Income, Cazenove UK Opportunities and M&G Global Dividend, as well as some relatively lesser-known portfolios such as FP Argonaut European Alpha, Baring German Growth and Somerset Emerging Markets Dividend Growth.


Model portfolios – To help the less-informed investor, Blowers and his team have created a number of model portfolios and common investment scenarios.

“Again, constructed by FE Research, there are three ‘core’ model portfolios and four goal-based selections (retirement, school-fees, mortgage buster and regular ISA saver) which are available for lump-sums or investing each month,” Blowers said.


Fund filter – Blowers explains that, as on FE Trustnet’s own website, investors can pick and choose funds via various filters including FE Crown Ratings, FE Alpha Manager status and risk level.

“Our new fund filter helps to generate investment shortlists fast and effectively, not just for unit trusts and OEICs, but also for investment trusts and ETFs. You can use one or all seven filters to find the funds you need,” he said.


Account benefits – Blowers added: “On top of all the high value content we provide (with much more to come), we have a single account containing a SIPP, ISA and general investment account (GIA) priced at 0.25 per cent, capped at £200 per annum.”

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John Blowers Mar 11th, 2014 at 01:01 PM

All,

Thanks for the interest, which is really appreciated.

I’d like to respond to three themes:

1. Security of your money. All platforms should be equally secure for your investments, regardless of the parent organisation. All your investments are held in a nominee account which is equally protected with you as the beneficial owner. These nominees are used by all platforms and afford the same level of security (i.e. you are the owner of the shares or funds through the nominee and are unaffected by the financial position of the platform). Cash is slightly different as it is held – in our case – across 5 different banks at any one time (and not by us) and you are protected under the Financial Services Compensation Scheme, as you would be elsewhere. All platforms are FCA authorised and have to abide by the same standards, so your money should be equally secure wherever you choose to house your investments.

2. Site speed. The speed of the site has been variable for some but we expect it to improve over time as it is used more. Our technologists are watching carefully and should be able to further optimise site speed over the next few days.

3. Costs – we have been consistent in our message that keeping fixed costs down to 0.25% (capped at £200 p.a. across all accounts – ISA, SIPP, General) is extremely competitive. To keep these fees so low, we have variable charges (SIPP administration and transaction fees) so that you are in control of your costs. You can choose to keep your costs low, rather than us charging you all a higher fixed amount, regardless of your trading activity. We think that is fair, particularly when many people like to buy and hold investments for the long-term and may not trade much.
For example, a £200,000 portfolio at Trustnet Direct costs just £200 per annum, whereas a platform charging 0.45% would cost £900 per annum. There should be plenty of latitude to trade within this saving of £700 per annum.”

Reply
fireballx15 Mar 11th, 2014 at 02:53 PM

Regarding Costs and using the same £200,000 portfolio value. It's true the likes of HL would charge 0.45% (£900). However, they will also rebate typically 0.75% (in a few cases even more) in loyalty bonuses (£1500) for the so-called 'dirty' share/unit class, leaving an investor a net £600 to the good. Assuming a decent spread of say 20 funds (which HL would NOT charge £10 for each trade), this would amount to 20x£10 = £200 plus the capped £200 annual fee making a total of £400 with Trustnet Direct. Any tweaking of the portfolio funds during the year which may be necessary would of course incur further £10 trading charges.
£600 credit to my account with HL or £400 (minimum) to pay out with TD - I know which I'd prefer!

Reply
Thomas McMahon Mar 11th, 2014 at 04:22 PM

@ fireballx15

Hi. Please note that all rebates will be banned from 6 April.

All platforms will have to charge a clean share class fee and an explicit platform fee.

You will not be able to buy the dirty share classes with the "rebates" as you describe.

Reply
dlp6666 Mar 11th, 2014 at 04:40 PM

Is that 6th April this year, Thomas?

I thought the total ban didn't come in until 6th April 2016.

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Thomas McMahon Mar 12th, 2014 at 08:28 AM

@ dlp666

Yes, the commenter Michael below is correct. Charges have to be explicitly stated from this April. For example, a "rebate" on a charge of 1.5% of 0.75% is a charge of 0.75% to be added to the platform fee (0.45% in his example).

There is a lot of confusion around this area which, in my view, shows that the FCA were entirely correct to make the clarifying rule changes they are.

We will look into doing an article on this as the deadline draws near.

Reply
dlp6666 Mar 11th, 2014 at 03:34 PM

Yes, ironically HL doesn't come out too badly if one decides to retain the 'dirty' share/unit classes (since, as you say, their 'full' 0.75% rebate wipes out the 0.45% platform charge).

But since TD is only offering 'clean' share classes [it seems], there is not the chance of any rebate subsidy from them.

I think, though am not 100% sure, that HL will still offer the opportunity in future to buy the more expensive 'dirty' funds (for nil transaction fees), which offer the cashflow-friendly 0.75% rebate.

If I'm wrong, and, like Trustnet Direct [and others], they'll only offer clean unit classes, then with periodical funds switches into the cheaper-charged funds, the useful subsidising rebate will gradually erode.

Thus we'll eventually be out of short-term pocket - though hopefully benefiting from longer-term improved fund performance (as less dragged-down by higher charges).

Reply
Disgusted Mar 11th, 2014 at 06:02 PM

I might be wrong but I would assume that even if you hold the dirty class you will still pay 0.45% fee for HL. Therefore I really can't see your point. You will not be better off owning the dirty share class over the next 2 years.

Reply
Michael D Mar 12th, 2014 at 12:25 AM

This is correct. HL's literature quite clearly shows that the 0.45% fee is payable on "Inclusive" (dirty) fund classes from 1 March 14.

E.g. Cazenove UK Opps B - AMC is 1.5%, loyalty bonus is 0.75% and fee is 0.45%

Reply
dlp6666 Mar 12th, 2014 at 09:13 AM

Yes, but in terms of cashflow only, 0.75% cash rebate less 0.45% platform charge = net cash [and only cash] ADVANTAGE of 0.30% (cf. fireballx15's comment)

True, not really better off overall [as higher 'dirty' charges will be a drag on fund performance], but easier in terms of 'cashflow', surely, as you won't need to sell units to pay for the 0.45% platform fee - you can just use the 0.75% cash rebate.

Well, until the cash rebates are fully banned and then there'll be an equal playing field with the likes of Trustnet Direct etc.

Reply
John B Mar 11th, 2014 at 10:43 AM

More competition between platform providers is good. But what institutions are backing this platform? How safe would my investment be in the event of another global financial collapse?

Reply
 

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