At Project Financially Free we like nothing better than trying out a new investment platform. It’s fair to say that there is an abundance of excellent platforms available for UK investors right now, with the likes of Moneyfarm, Nutmeg, Wealthyhood, Hargreaves Lansdown and Vanguard to name a few.
InvestEngine only recently came to my attention having seen some positive coverage online. I’ve since been trying out the service over the last couple of weeks and have been very impressed with what’s on offer. But how does it stack up in a sector that’s already well served from a number of popular and well established investment platforms? Read our InvestEngine review to find out if the platform has anything additional to offer.
What is InvestEngine?
InvestEngine is an online investment service that allows you to invest in a wide selection of ETFs. It offers both active and passive investment options in the form of Managed or DIY portfolios.
A fairly new platform, InvestEngine offers a similar experience to the likes of Nutmeg or Vanguard LifeStrategy funds in terms of it’s managed portfolios. However unlike Nutmeg they also offer a DIY investment approach for those who are looking for a more hands on experience. Appealing to both beginner and more experienced investors alike.
What do InvestEngine Offer?
InvestEngine is focused entirely on ETFs. So if you are looking to invest in individual stocks then the platform isn’t for you. If you are looking for low cost individual stock trading then Fineco or Hargreaves Lansdown are worth checking out. The main benefit of a solely ETF focused platform is low cost and easy diversification.
In terms of account types for personal investors InvestEngine offers an ISA and / or a Personal Account (aka a General Investment Account or GIA). So while there are no Pension, LISA or Junior ISA options currently, products that are available from the likes of Nutmeg, they do have a bit of an ace up their sleeve which is likely to appeal to business owners in the form of a Business Account. Providing business owners with the ability to easily invest surplus cash into the stock market rather than sitting in a bank account likely earning minimal if any interest.
All of the above mentioned account types can invest in either DIY or Managed portfolios. Aside from the obvious, there are a few key differences between these portfolios.
As the name suggests a DIY portfolio offers you the ability to choose your own investments (from a range of over 500 handpicked ETFs), decide on the % investment split between each individual ETF, utilise one click rebalancing or buy and sell individually if you wish.
If you are looking for some investment ideas, then can take a look at large piece that I wrote on different ETF investment options. I also wrote extensively on Vanguard funds that are good for UK investors, retirees, and for your emergency fund.
Managed portfolios will appeal to passive investors or beginner investors who are looking for a straightforward invest and forget type approach. First you choose whether you want to invest for growth or income and then answer a few questions to assess your risk tolerance. The platform will then assess which of their portfolios are suitable based on your goals and risk level. All that’s left for you to do is pick a portfolio from the suggested options, fund said portfolio and you’re up and running!
For me this is where InvestEngine really stands out from the competition. Their fees are some of the lowest available.
For their DIY portfolios there is no platform fee at all. No dealing charges. No withdrawal fees. Zero, zilch, nada. The only costs you are going to incur here are whatever ongoing charges are applicable from your chosen ETFs and a small market spread (more on that later). Keep in mind that the ETF ongoing charge and market spread applies regardless of what platform you invest with.
In terms of how that compares to other well known active investment platforms you can see in the example below based on a £10,000 starting portfolio with ten £100 UK ETF trades a year for 10 years assuming 5% growth pa on the initial portfolio size:
For the managed portfolio again there are no dealing charges or withdrawal fees. The annual charge is just 0.25% which makes it one of the cheapest if not the cheapest option around for a managed portfolio.
In the example below you can see how this compares to other market leading platforms:
*Hargreaves Lansdown’s managed portfolios contain actively managed mutual funds which carry higher fees than ETFs
The above illustration is based on a £20,000 Managed Growth Portfolio compared against other similar providers of ETF managed portfolios in the market. It has been calculated on the basis of fees noted on their websites as at 30 April 2021. The information above is for illustrative purposes only and for up to date fees you should visit their respective websites.
It’s also worth noting that there is also a small difference between the buying and selling prices of the ETFs – known as the market spread – with the managed portfolio these spread costs average just 0.07% a year
As you can see, from a cost perspective InvestEngine offers exceptional value whether you are an active or passive investor.
You can see further details and use InvestEngine’s simple fee calculator tool here to get a better understanding of costs for your specific circumstances.
As you would expect from an online investment service, funding or topping up your portfolio couldn’t be easier. You can either fund your account via a manual bank transfer or an instant bank transfer using Open Banking. For regular top ups you can also set up a Direct Debit or Standing Order.
You can get started with InvestEngine from just £100 initial investment. After you have funded your portfolio with your initial investment you can add further funds whenever you like or set up a Direct Debit or Standing Order for regular contributions.
Desktop & App Experience
Like most of the top investment platforms InvestEngine offers both a desktop interface and mobile app. Both the desktop and app platforms offer a clean, straightforward interface. On both platforms you can view your portfolios, rebalance, withdraw or top up your account – essentially anything you might want to do can be done on either the desktop platform or app.
It’s clear that the main focus for both platforms is a simple interface that provides an excellent user experience with minimal distractions. Other investment platforms may look a bit prettier or offer a few more bells and whistles, however InvestEngine really gets the basics right. In my book that’s the most important thing.
Portfolio Look Through
InvestEngine have recently launched a new feature called Look Through. This allows you to see how an individual ETF or your entire portfolio is broken down by asset type, companies, sectors and geographical regions.
To find out the breakdown of each ETF you simply click into it and scroll down where you will see the holdings, sectors and regions breakdown.
Once you’ve built your InvestEngine portfolio, you can use the analytics option to see the full breakdown by geography and sector and check your overall exposure to each company.
Is InvestEngine Safe?
Yes, absolutely. InvestEngine is safe. They are incorporated in the UK and are authorised and regulated by the Financial Conduct Authority [FRN 801128]. What this means is that there is strict oversight of the company, its processes and procedures, and its financials by the FCA.
But it is important to understand that this is different from market risk. The FCA protects investors from fraud or malpractice at the broker or investment firm, but it does not protect you from losses if the market were to go down 50%. That is why it is important to remember that investing carries risk and you could lose your capital if the market goes down.
From a portfolio perspective, as InvestEngine limits you to investing in ETFs, your odds of losing money on single stocks blowing up are limited. By nature, ETFs tend to hold numerous companies, so it does help with easily diversifying your portfolio. But you will still have to take the standard market risk.
Conclusion: Is InvestEngine a good choice?
As mentioned previously there are currently a lot of excellent investment platforms out there to choose from. Like most things, whether InvestEngine is the ideal platform for you or not will come down to your own individual circumstances. For example if you are looking to invest in a managed SIPP or LISA then something like Nutmeg is going to be a better option for you.
Personally I’ve been massively impressed with what InvestEngine has to offer. If you are looking to invest in an ISA or a General Investment Account, the combination of extremely low costs, managed or DIY options, a slick user experience and good range of ETFs is very hard to beat. Not to mention the added bonus of a business account if you are a business owner looking to invest some surplus cash.
Whether you are a newcomer to investing and looking for a simple, low cost invest and forget approach. Or a more experienced investor looking to build and manage your own portfolio of ETFs, InvestEngine looks to be a solid choice.
by Jon Craig
I am the creator of Project Financially Free and I started this journey to both educate myself and share my insights on personal finance. I’m passionate about financial literacy and I invite you to join me on this transformative path. See more.