The online broker InvestEngine offers ETF investing in DIY or robo-advice flavours. It’s beginner-friendly and suitable for veterans with large portfolios.
Moreover it’s a market-beater on costs.
Aside from the exceptionally low fees, InvestEngine feels like it’s been designed to make important investment decisions straightforward. The trade-off is some choice constraints, compared to other brokers.
- Low costs: InvestEngine’s zero commission / zero platform fee combo is awesome for DIY investors. The robo-advice / managed service is cheaper than its rivals, too.
- Easy to use: the platform is very thoughtfully designed, and gives the impression InvestEngine is on your side.
- Pro passive investing: the restricted choice of ETFs is good enough. The calm user environment should promote sensible investing behaviour. As opposed to exploiting your monkey brain.
- Choice constraints: it’s ETF investing only. There are few bells and whistles. For some this will be a positive. Choice overload bedevils investors, after all.
- Limited account options: there’s no SIPP, Lifetime ISA, or Junior ISA.
- Robo-advice complexity: the ready-made portfolios betray the over-elaboration that’s commonplace in the discretionary management industry.
|Platform||Annual fee||Fee notes||Dealing: Funds||Dealing: ETFs||Regular investing||FX charge||Entry/exit fee||Good for|
|InvestEngine||£0 DIY investing||0.25% for managed portfolios||n/a||£0 for fixed times daily||n/a||n/a||£0||Very low fees|
Note that a dash sign in the table means ‘as above’.
- Investment amount: £1
- Account balance: £100
- Account top-up: £1
Pros and cons
InvestEngine is the Double Decker of investment platforms. Two contrasting approaches are combined in one tasty product:
- DIY investing that’s near-free.
- A managed portfolio service that suggests and implements investments for you. (Also known as a robo advisor.)
The DIY investment side of InvestEngine is a serious contender – if you’re happy to work within its limitations.
You can only invest in a restricted palette of ETFs. No shares, no funds, no investment trusts. There’s talk of adding more investment types later. But for now it’s just a select range of ETFs.
Personally I don’t see that as a problem at InvestEngine’s prices.
Granted, there are fewer ETFs available than at brokers who charge more.
But I could easily build a diversified portfolio from the InvestEngine range.
Most of the big ETF names are present and correct: Vanguard, iShares, HSBC, SPDR, and so on.
I found low-cost options available in every important asset class. (Admittedly a few of my usual go-tos were missing.)
Trades are executed automatically. InvestEngine buys and sells ETFs between 2.30pm to 4.30pm every day.
You put in your orders in advance. But you can’t trade at will as with most platforms. And there’s no fancy trading options like stop-loss or limit orders.
Prices are only updated on the platform twice a day. No worries! Just Google the price of your chosen ETF instead.
You can’t invest in a SIPP, Junior ISA, or Lifetime ISA for now. But a stocks and shares ISA and general investment account come as standard.
If any of the above is a dealbreaker for you then forget about InvestEngine.
Certainly day traders hooked on CFDs and candlestick graphs would enjoy it about as much as swingers at evensong.
But otherwise, such restrictions are the quid pro quo for the platform’s passive investing strengths.
The main USP
InvestEngine’s standout feature is the pinch-me-I-must-be-dreaming lack of fees for its DIY service.
You’ll only pay the usual ETF management fees and dealing spreads.
There’s no platform fee or dealing commissions. Such charges typically make ETF investing expensive for small and new investors.
You won’t get gouged by other costs either. Don’t fret about inactivity fees, cash withdrawal charges, or FX conversion costs every time you deposit some money.
Entry and exit fees are also absent. So you can try InvestEngine without feeling locked in.
How does it do it? Probably by reducing overheads by reining in the vast lightshow of options you get with most brokers.
That doesn’t mean InvestEngine has reduced customer support to a chatbot streaming expletives though. On the contrary, it typically seems responsive and helpful, judging by our sweep of the online feedback.
InvestEngine has not cut corners on the online interface or app. Both are a pleasure to use.
Design is minimalist, thoughtfully uncluttered, and very clean.
There’s no creeping gamification. You don’t sense that the information architecture is designed to manipulate you.
The interface feels intuitive, easy to navigate, and attractive without being overwhelming.
Sure, the portfolio analytics are slight. If you expect lots of flashy tools and investment ‘research’ then look elsewhere.
But what you do get is a very clever fund portfolio order facility:
- Tell InvestEngine what ETFs you want in your portfolio.
- Select your asset allocation percentages.
- InvestEngine then executes the necessary trades to deliver on your asset allocation. You don’t have to micro-manage them.
Once you’re up-and-running, you can use this feature to automatically rebalance your entire portfolio to its target allocation with a click.
That’s a passive investor’s dream.
Do robo-advisors dream of electric money?
InvestEngine presumably hopes to make bank through its managed portfolio and robo-advisor service.
The fee is 0.25% per year, plus an estimated 0.07% in trading spreads. That’s considerably cheaper than established rivals such as Moneyfarm, Nutmeg, or Wealthify. (Albeit we’ll have to see if it lasts.)
This ready-made service works much as you’d expect.
You answer an automated risk tolerance questionnaire. Doing so supplies your attitude to risk, financial objectives, resources, goals, and time horizon. InvestEngine takes you down its decision tree and then serves up one of its ready-made portfolios for your approval.
Accumulators can choose the growth portfolio options. Meanwhile anyone in the decumulation zone might opt for an income portfolio.
If you don’t like InvestEngine’s initial suggestion you can play around the edges a little, retake the questionnaire, and see what else is on offer.
But beyond that you hand over your portfolio’s management to InvestEngine.
It will rebalance for you. The ETF mix you hold will occasionally be tweaked in line with changes to your investment strategy, risk tolerance, or the product range.
Computer says why not
In my view, InvestEngine’s robo-advice approach suffers from the industry-standard flaw of over-complication.
It offered me a growth portfolio that included 14 ETFs. Asset allocation weights were as low as 1%. There was also a dollop of investment overlap.
Meanwhile, the income portfolio was 99% bond ETFs studded with some eye-brow raising junk bond and emerging market sovereign debt choices.
To be fair though you might run into these issues with any managed portfolio provider. They’re the price of outsourcing control.
If you want a robo-advice service then InvestEngine is worth a look. It delivers competitive fees, product transparency, and ease of use.
Note it’s not regulated to offer financial advice however. (See InvestEngine’s FAQs.)
Some other robo-advisors do provide that – for a fee.
InvestEngine review summary
All-in-all, InvestEngine impressed me. Its market niche is truly pro passive investing and keyed towards getting the big investing decisions right.
Low to non-existent fees mean it’s definitely worth trying – assuming you don’t mind the platform’s pared down choices. Note, transfers in are cash only, not in specie.
InvestEngine is authorised and regulated by the Financial Conduct Authority – Firm Reference Number 801128.
- Cash is held in a pooled client money account at Natwest.
- Investments are held in a pooled nominee account lodged with Euroclear (CREST). They are segregated from InvestEngine’s company assets.
This is industry standard.
- Vanguard for small investors
- Freetrade or Lloyds Bank Share Dealing for ISAs
- AJ Bell Youinvest for SIPPs
Don’t forget the bonus cash offer if you sign-up to InvestEngine via our link. (Capital at risk. T&Cs apply).
Like many other sites, we may be paid a small commission if you sign-up to products via affiliate links. The price you pay is not affected. Our reviews are editorially independent.
I opened an InvestEngine DIY ISA a few weeks back – it was wonderfully straightforward to open, and has been easy to use so far.
I’m just using it for platform diversification away from HSDL – it’s ideal for hands-off passive investing in my opinion. I’m investing in VEVE/VFEM (90/10 weighting) with a possible bond element ‘later’
“For a limited time, open an account with InvestEngine via our link and get up to £500 cashback when you invest in an ISA”
Damn and blast… too late. 🙁
Just opened as ISA account (DIY), really easy process. This is the perfect platform for us at this time.
The £500 cashback will be a nice bonus, hope it comes through.
Thanks for the review and link.
@Neverland – You either are or you aren’t paid a commission by InvestEngine for signups by affiliate links?
I do not begrudge the Monevator duo any commission they might get, the content they produce and the frequency/regularity etc, is priceless to me and I think probably others.
It’s my choice to use any links.
Why always so negative?
Constructive readers are welcome to ask questions about affiliate links. 🙂
We’ve been using and disclosing them for many years. They are on the vast majority of sites, and are the bedrock of earnings for the very well-respected (including by us!) MoneySavingExpert.
I say “may be paid” because there are usually different ‘hoops’ in the T&Cs that determine whether we are paid. For instance I’ve included an affiliate link from savings app Chip in Weekend Reading. For us to receive a payout it’s not enough to click (almost never is with any site) or even for a reader to sign-up. They have to make a first save, and then they have to remain active on the platform for at least 30 days. So ‘may’ is the appropriate word.
@FI-FireFighter — Thanks for the kind words, glad you’re finding our site of value!
@BerkshirePat — Ah, the curse of moving too quick off the mark… 😉 (You’ve just reminded me that I expected to get a similar share from moving a bunch of my ISA allocation to Freetrade a while ago. Need to chase that up!)
Oh well, win some lose some…
I did get an invitation to express an interest in the InvestEngine Crowdfunding, which I have done. Aparently ‘You will be able to secure your investment before anyone else. All you need to do is register for exclusive priority access.’
Opportunity to make back the lost £500? Or ‘lose’ another £500? …we shall see
Considering we are here for the long term…What would happen if our S&S ISA provider closes its platform in the future? Let’s say we have over 100k in it, could we transfer the investments into another ISA?
Is there a post about it?
@ Luis – yes, you’d be able to transfer. Most likely another broker would acquire the client base of the closing platform.
If the closure/acquisition was orderly, you’d have the right to transfer away to a new broker of your choice beforehand. If disorderly then you’d eventually be able to transfer as part of the bankruptcy proceedings.
These pieces may help:
This looks like a very promising ISA option – at least it will be for me, as soon as they can handle in specie transfers. At present they say they can only handle cash transfers in, so that would mean cashing in existing investments and taking the risk of the markets moving in the wrong direction while the transfer was in progress. May still dip my toe in!
How much do I need to invest to get the £500 cashback? Does the ‘upto’ mean there are different tiers?
Probably a lot of people are looking for this nugget of information:
Net Contribution (£) Cashback (£)
Maybe also useful to link people to the full terms and conditions of the incentive: https://investengine.com/terms-incentives/
Facility to purchase fractional shares of the etfs and set allocation percentages is beneficial when contributing.
One thing I’m not clear on:
Do you need to be using one of their managed portfolios to get the cashback? Or can you get it when transferring into their free DIY service?
@Dan — I’ve sent a note to our contact for clarification. Will post an answer when I get one!
Their fees will rise in the medium term, once they’ve gone through a few investment rounds and burned through their crowdfunded capital.
I mean, they’re basically following the Vanguard business model of batch trading ETFs only a few times a day to cut their back-end costs to close to zero, but even Vanguard have to charge a 0.15% account fee to sustain this.
My impression is you just need to get funds into any ISA (via transfer or new deposits) by end of 5 April, ad therefore does not require taking up any particular investment options.
But note that the qualifying sum needs to be maintained in the ISA right through to 5 April 2023. So don’t think you can switch to another provider in that time (or withdraw from ISA) without having to pay back the bonus.
I feel slightly better that my ‘loss’ is a maximum of £150 ( I wasn’t planning on transferring exiting funds in, just max ISA for 21/2. )
Wish there were an edit function (unless I missed it?)
..existing funds in… max ISA for 21/22
Possibly one thing to add to the review, which wasn’t mentioned.
ISA Transfers in and out are Cash only, no in-specie transfers.
@Dan — I’ve now heard back: “It’s for either DIY or managed”.
Hope this helps!
@ Dead-Penguin – Nice one, I missed that.
Re buying ETFs domiciled in Ireland and elsewhere outwith the UK via InvestEngine – am I right in saying the £85k FSCS cover is protection should InvestEngine go bust (and them having not properly segregated customer assets) and the protection offered by Ireland for an Irish domiciled product like VWRL is for slim chance that Vanguard bites the dust?
If so, presumably as long as the former is in place, most don’t have any concern about the latter or bother delving much into the protections offered in these other countries of domicile?
I’ve been using them for a few weeks and it’s probably the best platform out there.
I’m with YouInvest for most things but if starting out, InvestEngine would be a good fit.
@ Norman – you’re spot on. I’d agree that the chance of Vanguard going pop in a mushroom cloud of fraud seems unlikely. Another way of creating peace of mind might be to diversify big holdings between Vanguard and another fund provider.
They don’t need to charge fees because of their order execution model.
Delivering ETF shares at the end of the day means that they can pocket the difference between the price when the user buys the ETF and the end of the day. This can be orders of magnitude larger than the spread in other platforms. If they do their job properly, the difference can be quite significant (definitely more than HL’s 0.45% management fee – just to compare with an expensive alternative).
Personally I prefer to stay away – as I value the instant order execution model of pretty much every other broker. But for people with very small portfolios, where paying £10 per order is “too much” InvestEngine can be a good alternative.
TLDR: the “Good For” column should say “good for small portfolios”. Saying that this is “low fees” can be a bit of a stretch.
@ TA – thanks. I’ve got a large chunk of cash in an iWeb S&S ISA which will need investing in something at some point (a combination of analysis paralysis and utter dithering since the onset of the pandemic). Moving £85k to InvestEngine (or £100k for the bigger bonus) could be a good move. Being able to drip feed purchases at no cost might even encourage me to buy something at last!
Does this support fractional shares? I.e. if I put £50 in each month, but the (sole) ETF I pick trades at, say, £30 (VUKE), then will it buy 1.66 shares or just 1?
Hi Lone Exchanger – The short answer is yes. The long answer from Invest Engine’s T&Cs:
With InvestEngine you are able to invest in fractions of a share or security (Fractional Investments). This allows you to invest in smaller amounts than you otherwise would, as the price of a share in some of the investments available on our Platform would otherwise far exceed the minimum investment size.
Fractional investments do however carry some additional risks to whole‑share investments. Due to the nature of a fractional, you will be allotted the proportionate value of a share you have invested in, rather than the whole of the share itself. This means that your fraction only exists within the InvestEngine Platform and you will be unable to transfer out any fractional investment. Depending on market factors and liquidity, the purchase or sale of a fraction may take longer than a full share, and prices may have moved more than anticipated when creating an order.
Great name, btw.
@ Cancamusa – thank you for that insight. That is really good to know. As ever, there’s no free lunch.
@Cancamusa, do you live outside the UK? The reason I ask that is because the situation that you describe would be illegal under MiFID Best Execution rules. If there is a loophole in which the broker creams off something from the trades but does not disclose it to clients I would very much like to hear about it. Could you elaborate please?
In theory it should be possible to get better prices for clients by aggregating buys and sells, just going to market for the residue.
@Naeclue @TA This factchecking is one of the many reasons why Monevator is such a powerful ally.
@Naeclue No, I live in the UK. I am also not an expert in MiFID rules, but would be very surprised if any broker, having the knowledge that they will have to fill a given number of orders at the end of the day, do absolutely nothing with that information.
Still, I wouldn’t say that this does not comply with MiFID – after all, they are disclosing to the clients that the trades will happen at the end of the day. And they are still in a position to offer best execution at that precise moment.
Also, this is not a new thing. There are at least two other brokers (to best of my knowledge) that offer this batch model for ETF trades at the end of the day: 1) Vanguard offer an end-of-day bulk dealing service, or otherwise they charge a fee per trade 2) FreeTrade used to offer both models too, where live execution would attract small fee (however, over time this fee was scrapped). But in both of this cases there’s the possibility of getting instant execution, even if that includes an extra fee.
And yes, in some cases aggregating buy and sell trades could lower costs (if the orders are crossed properly). But you can also have the opposite situation of having too many orders/volume in one direction – where, due to market impact, the extra costs/spreads could be considerable.
The Vanguard trades do not take place at the end of the day. There’s usually two sessions a day late morning and mid-afternoon. I have executed a number of buys and sells on the platform and these no-cost trades have matched the LSE prices each time. There is a charge for buy-it-now trades but I’ve only felt the need to use it once.
@Cancamusa, thanks for coming back on this. I have been looking through the InvestEngine documentation. Appendix 1 of the Terms and Conditions for Clients sets out the Order Execution Policy. They state that they have a 12:00 GMT cutoff time and trades will be executed by 18:00 GMT on the same day. Under Trade Aggregation and Allocation, they explain how instructions may be aggregated:
“So that we may trade efficiently, we may aggregate our customer orders before going to the market. This reduces a number of risk including settlement and counterparty, as well as providing economies of scale to improve the possibility of getting the best price available.
We seek only to execute transactions when we can confirm that the client and market orders are equal. This means trades will only be executed on the basis that they can be filled 100% in volume. The trades will then be allocated to the clients in the proportion that was calculated before the trade was executed – ensuring that you receive the correct amount.”
Essentially multiple instructions are aggregated, a trade is done for that amount and shares divided up according to the instructions, with all recipients getting the same price. There may be multiple market orders involved of course, all at slightly different prices. In this case it is not clear whether everyone would get the same weighted average price, or just the price in their particular market order, but weighted average would seem the fairer way of doing it.
The end of day price is of course very likely to be different to the price obtained at the time of the trade, but I cannot see how InvestEngine can legally benefit from that movement. Are you saying they do in some way?
@Onedrew, I have been looking at the trade times in a relative’s Vanguard SIPP and there do appear to be 2 trading points per day. The first seems to be around 10:10, with a few outliers up to an hour earlier and the second at 14:10 most of the time, again with a few odd outliers. Maybe they slot in extra trading points when there are large orders to fill.
@Naeclue I stand corrected then. If they execute all trades at end of day and don’t behave like a market maker, then it is harder to get a benefit (aside from the known reduction of costs and complexity of “only” having to process a single batch of order) and other brokers are doing it in one way or another anyway. There would also be the option of selling the data to third parties, although I think that this would be considered quite nasty too in the UK so wold be very surprised if that would be the case.
Anyway, keen to see what happens in the future with this platform – if they demonstrate to be able to maintain low fees with relatively decent selection of ETFs (even if it is restricted), that might be good for pushing down fees across competition – ultimately benefiting retail clients 😉
@Onedrew I stand corrected here too – I was not aware that Vanguard would have two different points to send the batches (mid-morning and UK end of day), although considering that their volume of orders should be considerably higher I can understand why they would prefer to implement batching of orders this way.
@cancamusa: For the avoidance of doubt, I am pretty sure Vanguard trades do not take place at the end of the day as you state.
I have seen none occur later than a couple of hours before the end of the day. All mine have occurred before 2.30pm which matches Naeclue’s research. Orders placed later in the afternoon or up to 9am the following morning have all executed around 10am.
This does look like a very good value broker. It is right to be suspicious of someone offering something for nothing though, especially in financial services where there is a long track record of hidden charges. The only hidden charge I can think of think of that I regularly pay and might apply is a foreign exchange fee for converting ETF dividends to pounds. This can be quite high, Hargreaves Lansdown charge 1% but Vanguard charge nothing. Could not find out what InvestEngine charge.
The ETF list contains all the ETFs that would be of interest to me from Vanguard and iShares.
I use iWeb share trading for our ISAs. They don’t charge a platform fee either, but do charge £5 for each trade. IWeb offer OEICS as well as ETFs though and some of these have lower charges than equivalent ETFs. For example the HSBC Europe ex UK fund has an OCF of only 0.07%, which is better than any ETF I know of.
I will not be moving across to InvestEngine, but will be watching their progress with interest and wish them the best of luck. It is great to see more real competition for retail brokers. What they charge for a SIPP will be especially interesting. They have beaten Vanguard on price and choice for ISAs, can they beat them for SIPPs as well?
Forgot to mention, for ETFs, iWeb offer immediate execution, unlike InvestEngine.
Anyone intending to open an account via the referral link should note that, according to the terms and conditions, the ISA cash back offer mentioned in the article ended on 5th April 2022.
So if you have a lump sum and intend to to invest via cost-averaging it’s probably best to keep the money somewhere that it’s getting at least a nominal amount of interest and feed it in now the option to get a kickback is off the table.
@Offmypickle — Cheers for the heads-up that we still had that offer in the copy, although as you note the termination was stated in the T&Cs. Anyway I’ve removed that section for clarity. There’s still a £25 sign-up offer there via our affiliate link.
Regarding cost-averaging versus investing a lump sum, as you probably know this is primarily an emotional-related decision where the maths favours investing right away:
Nothing wrong though with cost-averaging in a lump sum if someone is risk averse (particularly if it’s a one-off / life-changing sum) one and can’t bear being one of the cases where taking a slower approach would have been more profitable (/less short-term loss-making).