Hello, fellow investor! This article will give you our honest opinion of InvestEngine, a commission-free UK-based ETF investment platform. InvestEngine is a strong option for UK investors who want to invest exclusively in ETFs (whether they do it automatically or manually pick the ETFs themselves).
InvestEngine allows users to create a Do-It-Yourself (DIY) ETF portfolio or an automated ETF portfolio according to their risk profile using an ISA, Personal Account or Business Account.
It exclusively focuses on ETFs, with a selection of over 500 ETFs from several providers: iShares, Vanguard and other leading asset management firms. Despite this, the range of ETFs and other investment products is limited.
That’s InvestEngine in a nutshell! Keep on reading to find out what our research team has to say after a careful analysis. Here’s what we’ll cover:
1. InvestEngine Overview
Founded in 2019, InvestEngine is an ETF platform that allows you to build your portfolio using only ETFs. ETFs cover most major asset classes and sectors, providing a broader selection of investments. With a single platform, you are well diversified without selecting individual stocks or bonds.
|🗺️ Supported Countries||United Kingdom (UK)|
|💰 Fees||0%-0.25% (per year)|
|🎮 Demo Account||No|
|📈 Fractional Investing||Yes|
|💵 Minimum Deposit||£100|
|📍 Investment Instruments
With a minimum deposit of £100, you will have access to all their products. It also includes fractional investing, allowing you to invest as little as £1 in any ETF each month.
By using “one-click rebalancing”, you can restore your ETF portfolio to its original weight. This feature is quite handy as it allows you to reset your portfolio quickly. Suppose you allocated 30% to ETF A and 70% to ETF B. Over time, ETF A may increase more in value than ETF B, and the allocation reaches 35% and 65%, respectively. With an easy tap, you return to the initial portfolio.
Furthermore, smart orders allow you to set the investment amount and choose the weight for each ETF. The next step is to turn on Autoinvest, which will automatically invest any money you deposit into your current ETFs.
The platform is designed for UK investors, so it offers their personal accounts under the Stocks and Shares ISA and a corporate account for small to medium enterprises (SMEs).
The fee structure is extremely transparent. Only a 0.25% annual management fee will apply to managed portfolios. If you prefer to manage your own investments, it will be completely free.
Finally, as detailed in the Safety section, InvestEngine is authorised and regulated by the Financial Conduct Authority (FCA) and is a member of the Financial Services Compensation Scheme (FSCS).
2. InvestEngine Pros and Cons
- Simple and intuitive investment platform
- No ISA fees
- No deposit or withdrawal fees
- Fractional Investing
- One-click rebalancing
- Limited to ETFs
- Only available in the UK
- No SIPP
3. Investment Products
InvestEngine only offers ETFs. Currently, there are more than 500 ETFs available. Using the following criteria, you can pre-select the range of ETFs that you wish to include in your portfolio:
- Asset Class: Equities, Bonds or Alternatives (mainly Commodities)
- Income distribution: Distributing means that on a periodic basis (usually quarterly), you will receive dividends in your account or Accumulating where the dividends are automatically reinvested within the ETF (the money never arrives at your account).
- Type of Hedge: Currency-hedged to pounds, where you will be protected from exchange rate movements when holding foreign assets or Unhedged, where you may benefit or be harmed by currency movements.
- ESG: You can select “Yes” or “No” for ETFs that are chosen based on a set of standards that evaluates the company’s behaviour concerning environmental, social and governance (ESG) issues.
InvestEngine Review – iShares S&P 500 | Source: investengine.com
4. Investment Portfolios
Through the “DIY” approach, you will be completely free to use the ETFs as you see fit. You can easily observe the composition of each ETF by asset classes, holdings, regions and sectors, giving you a better idea of how your portfolio might look afterwards. Additionally, you can set your investment weights to create the right balance for your investment goals.
InvestEngine Review – Equity Look Through | Source: investengine.com
If you don’t want the hassle of looking for ETFs and building a portfolio, InvestEngine offers what it calls “Managed Portfolios”. For a 0.25% annual fee, you get one of two pre-built portfolios:
- Growth Portfolio.
- Income Portfolio: Estimated variable income up to 5.3%, depending on the risk level of your portfolio.
InvestEngine Review – Investment Services | Source: investengine.com
There is no information available about detailed composition of each managed portfolio.
5. Account types
InvestEngine offers three account types:
- ISA: Stands for “Individual Savings Account”, and it is a tax-efficient investment method. It allows individuals to invest up to £20,000 a year. There’s no income or capital gains tax to pay on any income or profits from your ISA investments. Tax treatment depends on individual circumstances and is subject to change.
- Personal Account: Contrary to an ISA, there is no annual limit on how much you can put in, but depending on your circumstances, you may be subject to tax on interest earned and capital gains.
- Business Account: Designed to allow small to medium enterprises (SMEs) invest their surplus cash. If you are interested in exploring this topic further, look at other Business Brokerage Accounts.
In these account types, you can choose between a DIY or a Managed Portfolios approach.
InvestEngine Review – ISA & Personal Accounts | Source: investengine.com
InvestEngine Review – Portfolios Weights | Source: investengine.com
Do-it-Yourself is free of trading commissions whereas managed portfolios incur a 0.25% annual management fee. Other than that, InvestEngine services are free.
There are, however, costs that are not controlled by InvestEngine (they do not benefit from them either) that will apply. Each ETF has an annual fee called Total Expense Ratio (TER). Usually, it is below 0.30% per year (“Average portfolio charge” in the table below).
Also, when buying and selling an ETF, you will notice bid and ask prices. The slight difference between those two prices is called the spread (“Average ETF spread costs” in the table below).
These charges are minimal and built into the ETFs’ performance.
InvestEngine Review – DIY and Managed Portfolios Fees | Source: investengine.com
InvestEngine Review – Income & Growth Portfolios Fees | Source: investengine.com
7. Safety and Reliability
InvestEngine is authorised and regulated by the Financial Conduct Authority (FCA), and all clients are covered up to £85,000 by the Financial Services Compensation Scheme (FSCS). In other words, the FSCS protects against the loss of cash and securities in the unlikely event of InvestEngine going bust.
As with most investment management firms, the company holds “all of your money in pooled client bank accounts with a recognised bank and your investments in a pooled client account at CREST (operated by Euroclear UK and Ireland), which is segregated from the firms and custodian’s investments”. As it is standard industry practice to reduce bureaucracy and save costs, registration of your investments will be held under InvestEngine Nominees Limited. This still means they have no legal claim to your assets and cannot use it to cover any of InvestEngine’s obligations. Therefore, you are the beneficial owner.
8. Customer Support
InvestEngine customer support is available through e-mail only (email@example.com) from Monday to Friday between 5:30 am and 9:00 pm and Saturday and Sunday from 8:30 am to 5:30 pm.
9. Supported Countries
InvestEngine only accepts UK residents, UK tax residents (to open an ISA account), and you must be over 18 years old.