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Online trading firm IG Group has entered the digital wealth management space with the unveiling of its IG Smart Portfolios suite, a range of model investment portfolios constructed solely with iShares ETFs and using asset allocation insights from BlackRock.
The five risk-rated portfolios (from cautious to aggressive) provide global investment reach, spreading risk across asset classes, geographies and sectors. They are rebalanced and continuously monitored by IG’s portfolio management team to respond to market conditions, delivering diversified, risk-assessed returns for minimal cost. The service is available to clients with a minimum investable amount of £500.
The platform also allows clients access to fractional shares of ETFs, ensuring their money is fully invested.
Research undertaken by IG on investor demands shows a substantial market opportunity for online investing, with half of investors (52%) currently preferring to manage their investments online and four in five (83%) saying they could be persuaded to switch online in the future.
Peter Hetherington, CEO of IG Group, commented: “The launch of IG Smart Portfolios is an important step in the development of our investments offering. We see a huge opportunity in online investing, with strong demand from investors for online solutions and transparent fees. Through our partnership with BlackRock, and building on our long-standing online trading technology expertise, we believe we have created a best-in-class offering for investors who are seeking an engaging digital low cost solution to their wealth management.”
IG Group has stated its fee structure is completely transparent and contains no hidden costs such as set-up, dealing, rebalancing or exit fees. Investors using the smart portfolios are charged 0.65% management fees on the first £50,000 invested, 0.35% on amounts between £50,000 and £250,000, and 0.10% on amounts over £250,000.
Additionally, the average cost of the ETFs used within the IG Smart Portfolios is 0.25% (ranging between 0.22% and 0.27%). This compares to an average ongoing charges figure of an actively managed fund of 1.42%, according to a report issued by the Investment Association in August 2016.
Ian Peacock, Head of UK and Ireland at IG Group, said: “Our research shows that many investors are confident handling their own investment choices, but even so, a number are still being blindsided by fees. Hidden charges materially eat into investment returns and it is crucial that providers are transparent about all fees upfront, so that investors know the exact costs they will incur. As we join the digital wealth management industry, we are keen to show that a low cost online service leads to greater consumer control and clarity, without compromising at all on quality. There will be no hidden fees when you invest with IG Smart Portfolios, meaning our client’s investments will work harder for them. Every charge an investor may incur is fully disclosed prior to opening an account and at all times while they invest with IG.”
The portfolios are ISA compliant, allowing clients to invest up to £20,000 in 2017/18 without paying capital gains or income tax. Clients may also use the portfolios for SIPP (self-invested personal pension) contributions, investing up to £40,000 this tax year with at least 20% tax relief on contributions and no capital gains or income tax.
The IG Smart Portfolios will compete with several rival offerings as the digital wealth management space has become increasingly competitive over recent years. Such competitors include Nutmeg, ETFmatic, MoneyFarm, NetWealth, Wealthify, Scalable Capital and Moola.