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IG Group champions fee transparency with launch of IG Smart Portfolios

Posted:
6/4/2017

A new partnership in investments is launching today, with the aim of putting true transparency at the heart of direct customer choice. Marking the start of the new tax year, IG, a global leader in online trading, today launches IG Smart Portfolios, a range of model investment portfolios constructed by IG using asset allocation insights from BlackRock. IG is being fully transparent on the total cost of investing in its model portfolios.

Many wealth management providers fall short when it comes to transparency on fees of direct-to-consumer offerings, leaving investors in the dark about the true cost of investing and the impact it will have on their returns.

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.”

IG Smart Portfolios
IG Smart Portfolios are constructed by IG using iShares® exchange traded funds (ETFs). The five risk-rated portfolios are constructed by IG based on asset allocation insights from BlackRock, the world’s largest asset management company. The ETF-based portfolios 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 low cost of ETFs, combined with IG’s low management fees, will help maximise returns in the portfolios for investors. There are no set-up, dealing, rebalancing or exit fees. Investors will get complete transparency on costs of the portfolios, with no hidden charges. Investors see the total annual cost of their investment which includes both the platform fee and the underlying portfolio costs. The platform also allows clients access to fractional shares of ETFs, ensuring their money is fully invested.

The fee structure of IG Smart Portfolios is as follows:

Total Value of IG Smart Portfolios On the first £50,000 Between £50,000 - £250,000 Over £250,000
IG management fee (%) 0.65% 0.35% 0.10%
Average ETF costs* % 0.25% 0.25% 0.25%
Total Cost of Ownership (TCO) 0.90% 0.60% 0.35%

ETFs have a small charge built into their performance, known as the Total Expense Ratio (TER). The average TER for the iShares® ETFs held in IG Smart Portfolios is 0.25%. This compares to an average ongoing charges figure (OCF) of an actively managed fund of 1.42%1.

Market opportunity for online investing
The launch follows IG Group’s development of a market-leading share dealing offering in September 2014, built on its award-winning technology platform, including ISAs, and the introduction of its self-invested personal pensions (SIPPs) offering in May last year. These developments are part of the business’s strategic aim of providing a comprehensive suite of products to investors and traders in the UK.

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 future2.

Peter Hetherington, CEO of IG Group, comments, “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.”

For further information on IG Smart Portfolios and to read IG’s report on online investing, please visit: www.ig.com/uk/investments

 

* The Total Expense Ratio (TER) for the ETFs in an IG Smart Portfolio is subject to your portfolio allocation and will be between 0.22% and 0.27%.    
1 Investment Association: Investment costs and performance (August 2016)
2 Research conducted by Opinium from 23 – 29 August 2016, with 500 UK investors / high earners