InvestEngine review: The lowest cost way to invest in ETFs

Those looking for a fee-free self-invested personal pension or stocks and shares ISA. (ETF costs and charges apply.) InvestEngine is one of only two providers in the market (Prosper is the other) to offer a SIPP without any annual/platform/account fees, so it’s definitely worth a look if low-cost is a priority for you.

The fully managed portfolio is a perfect option for complete beginners and those who don’t have the time or inclination to manage their investments.

There is a minimum investment of £100 to open an account after which time you can add further amounts or set up regular investing via recurring payments, standing orders, or direct debits, in order to drip-feed your money into the market.

Those seeking a more hands-on approach won’t be disappointed by the DIY portfolio, but bear in mind your choices are limited to ETFs. Therefore, day traders and those looking for a more interactive experience may not find this suitable.

It is also worth noting that education is fairly limited, and the restriction to ETFs wouldn’t provide a holistic scope of the stock market. So those looking to further their investment knowledge may be best served elsewhere.

All accounts come with two options, you can choose to open a fully managed service where all investments are handled for you in line with your appetite for risk, or alternatively, the DIY option which puts you in complete control of how your money is invested and represents the lowest cost way to invest when using this service.

General Investment Account (GIA)

Whilst this General investment account (GIA) is an account designed to provide access to investments. You may be liable for tax on any income or capital gains earned within a general investment account but this can be a useful vehicle for anyone who has maxed out their ISA allowanceGIA account is free to open and use, I wouldn’t consider this the flagship account type at InvestEngine (that accolade goes to the free ISA) but it’s a great alternative if you have maxed out your ISA allowance or, paid into another ISA this tax year.

Bear in mind that any gains made within this account are subject to tax depending on your personal circumstances.

Funding the account with a minimum amount of £100 will provide access to the whole ETF range.

Stocks and shares ISA

This is where InvestEngine really shines. Offering an Sometimes called an investment ISA, a stocks and shares ISA is an individual savings account that allows you to invest in shares, unit trusts, investment funds, and bonds. You will not need to pay tax on any income or capital gains earned on investments within an ISAISA with zero account fees effectively places InvestEngine as the lowest-cost ISA available. The amount required to start investing remains the same at £100 and like the GIA, the ISA provides access to the full range of 700 ETFs.

As with all ISAs, all investment gains made from within the ISA are free from tax so I would urge investors to make use of this. However, there are rules surrounding ISAs which must be adhered to, including an annual limit of £20,000 per tax year.

My tip for those with an existing ISA

If you have an existing ISA elsewhere and would like to make use of these low costs, I would recommend transferring it in rather than withdrawing from your existing ISA and paying the money in. This is to avoid breaking the ISA rule of not paying into two stocks and shares ISAs in any 1 tax year.

Read more about ISAs

Business Account

This account is available to limited companies and partnerships and is also free of any account fees. InvestEngine promotes this account as a way of utilising cash put aside for corporation tax. While it is always a good idea to put spare company cash to work while you wait to pay taxes, investing should always be considered a long-term endeavour with a minimum term of 5 years. Therefore, I’m not convinced as to the suitability of this account for tax money. However, any spare company funds that can be locked away for a minimum of 5 years, would be well served here.

The advantage of investing spare cash rather than paying out profits in the form of dividends is the ability to invest profits pre-tax, thus avoiding corporation tax.

SIPP

InvestEngine have recently scrapped the previous account fee that was associated with its A self-invested personal pension (SIPP) is a type of private pension that allows you to control the specific investments that make up your pension fundSIPP. That means, this is now one of only two SIPPs in the UK market to be free of platform/account fees. (ETF costs and charges apply.)

All the usual rules apply to the InvestEngine SIPP, and contributions will trigger the guaranteed government bonus of 20%, with higher-rate taxpayers looking to gain 45%. A pension remains the most efficient way to save for retirement, and a SIPP puts you in complete control of how your money is invested.

Note: the tax treatment of your investments is dependant on your individual circumstance and may be subject to change.

Read more about SIPPs here

InvestEngine currently only allows transfers into its SIPP from Vanguard accounts but more providers are coming soon, we’re assured.

Also on InvestEngine’s ‘working on it’ list, is allowing employer contributions to their SIPP. Again, we’re told this could well be coming in 2025, but it’s not yet possible. (Note: this is not a workplace pension, but for those who are able to set up their own SIPP to receive employer contributions.)

Markets

As previously mentioned, investment options are InvestEngine are limited to Exchange traded funds (ETFs) are traded in much the same way as stocks. Instead of an individual stock, however, you own a basket of different assets which track the performance of a particular index or market. ETFs.

You can read more about ETFs here

ETFs offer a low-cost way to invest and because ETFs, like mutual funds, generally hold dozens if not hundreds of different investments, they are naturally more diversified than investing in an individual stock or bond. However, they won’t be right for everyone. If you want to invest in individual stocks or bonds, then you won’t be able to, here.

There are over 700 ETFs available at InvestEngine which can be sorted according to asset class, provider, accumulating or distributing of dividends, ESG is an investment approach that takes environmental, social and ethical governance factors into account alongside more traditional financial factors.ESG, and hedged or unhedged.

InvestEngine Range of ETFs

There are also collections including leading global indices, money market funds, ESG, thematics, dividend-focused funds, multi-factor, emerging markets, and small caps.

Most of the big names are represented such as Blackrock, iShares, Vanguard, and Invesco, and the search function makes it easy to locate funds by name, theme, or industry.

Fully managed portfolio

For those without the time or inclination to manage their own investments, there is a fully managed service available at InvestEngine. This provides a completely hands-off approach, as experts will create and manage a diversified ETF portfolio on your behalf. You will be asked to answer a few select questions to identify your risk profile and investment objectives and ensure the portfolio is aligned with your investment goals. Questions include:

1. What is your annual salary?
2. What is your investing timeframe?
3. Do you want to minimise losses or maximise profit?
4. What would you do if there was a downturn?
5. How big a loss can you sustain before it affects your standard of living?
6. Do you prefer a guaranteed rate of return to uncertain returns?
7. Will you need to withdraw any funds in the next five years?
8. What types of financial instruments have you invested in before?

When I answered these questions, I was matched with a Growth 7 portfolio, which includes 4 bond ETFs and 9 equity ETFs. You can easily get an overview of the composition and performance of your portfolio, as well as future projections.

There is the option to manually adjust your level of risk in the suggested portfolio.

Fully managed portfolio performance

Whilst there is a lack of significant data available on the InvestEngine fully managed portfolios, we have managed to collate data from the past few years to give investors a snap shot into how these portfolios have performed historically.

There has been some promising growth in recent years which could be a sign of good things to come.

Fully managed or DIY?

As mentioned previously, when opening a new account, you have the option to select either a fully managed service which comes at an additional cost of 0.25% a year, or a DIY portfolio where you pick and choose all your Investments yourself. Which of these is best for you will depend on your individual circumstances, however, I have gone into some more detail on both these options to help you decide.

DIY portfolio

Selecting your Investments yourself can help to reduce your costs significantly. However, it is still very important to ensure that you are fully diversified across Industries and sectors and to have some knowledge of investing and or assistance in this area.

Once you have chosen your ETFs you can either invest equal amounts in each ETF or invest more in some and less in others. As markets rise and fall you have the option to use the one-click rebalancing feature to keep your Investments aligned with your chosen weights. Any changes can be made quickly and easily on the app.

Below are screenshots of my own DIY portfolio created when testing InvestEngine, with £100 invested in three ETFs.

What is important here is that, as you can see, the portfolio has lost slight value since I purchased my investments. This should in no way cause alarm; investments go up and down in value, which is why it is always suggested that investors remain in the market for a minimum of five years in order to ride out any volatility.

There are two options at InvestEngine, the web platform and the mobile app. Both will provide you with the same access to investment options, features, and tools.

There’s not an awful lot to say about the platform other than that it’s very easy to use and has a clean, simple-to-navigate design. It’s been well thought out to take the complexity out of investing, and is very user-friendly, even for beginners.

Demo mode

I’m completely flummoxed by the demo mode on this platform; it doesn’t appear to offer anything of value at all. You can access some of the resources, including InvestEngine Impact, and some of the top stories from last year, but you are unable to invest or add virtual funds.

Many investors who are completely new to online platforms enjoy using demo accounts before adding any funds, if only to get a feel for the platform. Considering InvestEngine is well-placed for beginners, this feels like a bit of an oversight.

There is little doubt that this is where InvestEngine really shines. In fact, I would go as far as to say that this is the lowest-cost platform available, especially for an Sometimes called an investment ISA, a stocks and shares ISA is an individual savings account that allows you to invest in shares, unit trusts, investment funds, and bonds. You will not need to pay tax on any income or capital gains earned on investments within an ISAISA and a A self-invested personal pension (SIPP) is a type of private pension that allows you to control the specific investments that make up your pension fundSIPP. The fees you pay will vary depending on whether you have a DIY portfolio or a fully managed portfolio.

DIY portfolios

This really is as cheap as investing gets. At InvestEngine, you pay no setup fees, no account fees, no trading fees, and no A foreign exchange (FX) fee is added to all trades involving foreign currencies. If you buy a stock that trades in US dollars, for example, and your home account is in GB pounds, you’ll need to pay an FX fee.FX fees on the ISA, General investment account (GIA) is an account designed to provide access to investments. You may be liable for tax on any income or capital gains earned within a general investment account but this can be a useful vehicle for anyone who has maxed out their ISA allowanceGIA, SIPP, or Business Account. (ETF costs and other charges will still apply.)

Fully managed portfolios

The cost of having your portfolio expertly managed for you is currently 0.25% per year. This is still highly competitive in the robo-advisor space.

ETF fees

All ETFs come with their own associated costs and what you pay will depend on the ETF you have chosen. ETF costs start as low as 0.03% but can climb to almost 0.90% so make sure you’re aware of the cost of the funds you select before going ahead with your investment. The average cost of a Growth Portfolio in the managed service comes to 0.14% a year.

To give you an indication of what excellent value this is, it is actually cheaper to buy Vanguard funds through InvestEngine than it is to buy them on the Vanguard platform. You won’t be able to access the Vanguard Lifestrategy funds here, but that’s because they aren’t ETFs, they are Mutual funds enable you to pool your money with other investors to ‘mutually’ buy stocks, bonds, and other investments. They are run by professional money managers.mutuals, and InvestEngine is solely for ETFs.

The only other cost to be aware of is the market spread, which is the small difference between the buying and selling prices of the ETFs. This is unavoidable but to give you an indication, the average spread cost on the managed portfolio comes to 0.07% a year.

For what this platform offers, I found the research and tools to be adequate. there is enough information without it being overwhelming. You can quickly gain access to information about the fund’s performance, whether it is an accumulating ETF, i.e. invests any income from its underlying holdings back into the ETF, rather than distributing ETF, i.e. paying it out, and the total expense ratio (TER). The TER is how much in percentage terms the ETF charges for investment management and admin costs each year.

There is a short overview of each ETF followed by a breakdown of holdings, regions, and sectors. You can view all the holdings of the ETF in question as well as the weightings of each holding and for those who really want to deep dive, there is a key investor information document on each ETF. This isn’t always available from these types of platforms.

What’s missing is relevant and up-to-date news that could affect the ETF in question.

The analytics tab is a useful tool providing a complete breakdown of your portfolio and there is the option to create reports based on various factors. When I tested this it was very straightforward and easy to facilitate.

There are a number of tools available designed to help you invest. These include:

Fractional investing

Fractional investing allows you to buy a share in high-value ETFs without paying the full price. Effectively you get a fraction of the share. As an example, with my own DIY portfolio, I only wanted to invest £100 in total. However, the Invesco NASDAQ 100 ETF that John chose for me, is priced at £319.67. Fractional investing allowed me to purchase just £32.92 worth of holdings, which is the equivalent of 0.102996 shares.

Other features include:

• Automated investing – allows you to automatically invest on your own schedule in order to drip feed your money into the market.
• Smart portfolios – allows you to set your investment weights to create the balance you want.
• One-click rebalancing – allows you to re-balance your portfolio to your desired weightings at the click of a button.

InvestEngine is fully regulated by the Financial Conduct Authority (FCA) ensuring adherence to a strict set of rules designed to protect the consumer. This includes keeping client funds in segregated accounts, thus protecting investors’ funds should the platform become insolvent.

In addition, InvestEngine is a member of the Financial Services Compensation Scheme (FSCS) providing compensation up to the value of £85,000.

Both of these bodies together provide assurance of gold standard safety measures.

Education is definitely not InvestEngine’s strong suit. I would have liked to have seen some courses or videos with some basic instruction but any education is limited to a handful of articles with topics that include Investments, InvestEngine News, ISA, Market Commentary, Investing 101, Thematic Investing, and Pensions.

Considering this platform is well placed for complete beginners, I do think there is a gap in educational material here. That being said, it cannot be denied that InvestEngine has succeeded in making this a very fluid and easy service, even for beginners.

InvestEngine has an excellent score on Trustpilot of 4.6 from 916 reviews. Here are two examples of reviews that mention customer service.

9 Nov 2023 Rapid Enquiry Response. A*

“The customer service has always been exceptionally rapid…to the point where an email enquiry at around 1am gains a reply within minutes; and this wasn’t the first time either. Very impressed all-round. Other factors, notably the mobile application interface add to the good standing of this company. Would recommend 100%.”

30 Dec 2023 Top-notch services

“Top-notch services are provided by an amazing Team of professionals. Highly appreciate the promptness and the fact that each query is effectively dealt with.”

Of course, I don’t just take other people’s word for it and have tested the service myself. The first thing I’ve noticed is that there is no live chat which with other platforms I have always found to be the quickest way to get a response. The best way to contact support on this platform is by using the help icon in the bottom right-hand corner of the website or by going to the Help Centre from within the app.

Once in the Help Centre, you will see the blue icon in the bottom right-hand corner. Simply follow the instructions and you will automatically create an online contact form. Response times have been varied, with some being within a few minutes, and at other times taking hours.

However, I would recommend trying the FAQs as there is a lot of information provided there.

Opening an account is a very quick and simple procedure. This is about as streamlined as you can hope to achieve whilst still performing all the correct regulatory requirements.

If you plan to utilise the Sometimes called an investment ISA, a stocks and shares ISA is an individual savings account that allows you to invest in shares, unit trusts, investment funds, and bonds. You will not need to pay tax on any income or capital gains earned on investments within an ISAISA, make sure you have your National Insurance Number to hand.

Otherwise you will be asked for some basic personal information such as your name, address, and contact details.

Expect to be up and running in around five minutes.

Trades placed are executed every business day at approximately 3:15 p.m. The trading window is 2 pm to 7 pm, so orders placed before the start of the trading window will go through the same day, otherwise, it will be the following business day.

Therefore, should you wish your order to be executed the same day, you should place your order before the 2 pm cutoff.

Once the trading window closes at 7:00 p.m, any changes made to your portfolio during trading will be updated. However, InvestEngine does stipulate that it can on occasion take until the following morning for the changes made to your portfolio to become visible.

Have a question about InvestEngine that we haven’t covered? Ask it here and we will get back to you as soon as possible!