Investment platform Freetrade looks to shake up the mutual funds market
Investment platform Freetrade has expanded its fund range, marking the first serious push by a UK neobroker into the mutual funds market, Morning Wire can reveal.
The platform is adding over 300 funds initially to its platform, offering choices across strategies and asset classes for UK retail investors, with more set to follow shortly.
It aims to expand its overall range to approximately 2000 funds, marking a key milestone for the platform as it aims to carve out a space in the direct to consumer retail investment market.
Mutual funds pool money from a range of investors in order to buy them wide exposure to a diverse range of investment vehicles, professionally managed on their behalf.
The market is dominated by open-architecture firms, offering broader access to investors than traditional services and asset managers.
Tackling the cash ISA trend
The investment platform is aiming for its wide range of funds, including stocks, ETFS, investment trusts, gilts and UK Treasury bills to lure investors away from cash savings.
According to research from YouGov, commissioned by Freetrade, over a third of investors said they were considering buying a cash ISA in the next 12 months, while only 5 per cent were considering mutual funds such as unit trusts and open ended investment companies (OEICS).
Young people in particular were swayed by the idea of a cash ISA, with 26 per cent of Gen Z debating investing in one, while 30 per cent of Millennials were also considering it, despite industry figures urging the younger generations to consider retail investing.
Freetrade chief executive, Viktor Nebehaj said: “The United Kingdom remains a nation of savers, in part because of poor digital experiences and high costs that persist as barriers to accessing a truly wide range of funds and strategies.
“We’re breaking down this barrier, bringing funds to the masses and introducing the next generation of investors to this popular investment class.”
Appealing to new investors
In its bid to shift people away from cash, Freetrade is also seeking to make mutual funds more accessible for investors by avoiding the use of asset-based fees which many legacy providers still charge.
Fees can ultimately leave investors facing higher costs as their portfolios grow, which are ultimately deducted directly from the fund’s returns leaving investors with a lower financial balance.
Freetrade is offering no commissions fees for buying or selling funds as well as transparent pricing to remove complexity and cost deductions.
Nebehaj said: “While mutual funds make up a large portion of retail investors’ assets in the UK, cost and complexity barriers have for too long made them less accessible to newer investors considering the move out of cash.
“By offering hundreds of funds on both our app and web platform, with no commissions, we’re bringing mutual fund investing into the modern era, democratising access to this versatile group of products for new and experienced long-term investors alike.”