Barclays Smart Investor: one of the better high street bank investment options

Barclays Smart Investor is probably best-suited to:

• Existing Barclays customers looking to keep all their banking and investment portfolios tied up neatly with one provider
• Barclays customers looking for a historically high performing ready-made portfolio

Accounts

Barclays Smart Investor offers its customers access to:

• 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 allowanceGeneral investment account
• 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 ISAStocks and shares ISA
• 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 fundSelf-Invested Personal Pension (SIPP)

An investment ISA (Individual Savings Account) is a tax-efficient wrapper in which you can buy, hold and sell investments.

The Barclays investment ISA is a ‘flexible’ ISA, meaning it’s possible to withdraw funds from your ISA without it affecting your overall allowance. In other words, you can withdraw funds and repay them at a later day within the year without it counting as a separate, second payment.

Discover our best-rated investment ISAs

The Barclays SIPP isn’t actually administered by Barclays – it’s an AJ Bell product so you’ll be subject to some additional third party fees. That’s not a bad thing, however, as AJ Bell’s SIPP is well-administered and you’ll find plenty of investment choice. You’ll still be paying Barclays prices for the SIPP, which is a shame as dealing fees are higher than AJ Bell’s. Going directly through AJ Bell for the SIPP, therefore, might be the better option.

Discover our top-rated SIPPs

Under the Barclays brand umbrella (although not within the Smart Investor brand), Barclays also offers access to various A cash ISA is a type of individual savings account where you can earn tax-free interest on your saved cashcash ISAs including an instant access cash ISA, 1-year flexible cash ISA and 18-month flexible cash ISA, all paying reasonably good rates of interest.

All can be opened with just £1 (or you can transfer an existing cash ISA in from elsewhere).

The following table shows how the Barclays cash ISA rates compare with competitors on the high street, and some of the other leading online providers:

Assets

Barclays provides customers with access to over 8,000 different investments to choose from, including:

• UK, US and European stocks
• ETFs
• Funds
• Investment trusts
• Bonds and gilts

That is not a huge choice when compared to the likes of interactive investor, or Saxo, or AJ Bell, but it’s probably more than enough to satisfy investors wanting access to the most popular funds and stocks.

When you invest with Smart Investor, you will need to factor in the following costs:

Annual fees

Up to £200,000: 0.25% of your investment value
Over £200,000: 0.05% of your investment value

If you have a portfolio worth just over £200,000, this is one of the lowest rates you’ll find anywhere. The 0.25% rate on sums under £200,000 is also very competitive – the same as is charged by AJ Bell – although NatWest, Vanguard and AJ Bell’s beginner’s brand, Dodl, charge just 0.15% for platform fees.

I recently tested fees for large portfolios across a range of scenarios and, as you can see from the following charts, Barclays did well when you hold international stocks and funds, but was less competitive on UK stocks:

Dealing fees

If you buy and sell shares, ETFs, investment trusts, bonds or gilts, you will pay £6 for each deal. (Funds are free to trade.) If you plan to trade often, it’s worth taking a look at a provider that offers zero commission on trading (like Trading 212, eToro or BestInvest if it’s just US stocks you’re buying) as, while £6 is cheap compared to Halifax’s £9.50 per trade, Lloyds’ £11 per trade, and HSBC’s £29.95 per trade on international stocks, there are certainly far cheaper ways to trade in the markets.

See our Best trading platform page for the top options for regular traders.

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

First £5,000: 1%
£5,000 – £10,000: 0.75%
£10,000 – £25,000: 0.5%
£25,000 – £250,000: 0.25%
Value over £250,000: 0.1%

These are high rates for smaller investments, but they become much better value when you’re investing large sums.

Fund costs

These are levied by the fund provider and – unless you’ve chosen a Barclays-managed fund – the product costs don’t go to Barclays. Product costs vary and can be found in the Key Investor Information Document.

A ready-made portfolio is a pre-made collection of investments that have been put together by investment experts. They are designed to be a simple option for those who don’t want to choose individual stocks or funds for themselves.Ready-made portfolios

There’s no charge to buy or sell Barclays ‘Smart Investor’ ready-made funds, but they all incur an ongoing charge of 0.45% per year. That’s in addition to the annual customer fee of 0.25% on investments up to £200,000 and 0.05% on investments above £200,000.

A total cost of 0.70% (for investors with less than £200,000) is relatively high for a ready-made portfolio as you can see from this comparison:

However, Barclays Smart Investor funds have historically performed very well so you may feel they’re worth the cost.

SIPP costs

Barclays’ 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 is actually administered by AJ Bell, so it is subject to additional costs on top of the standard annual fees charged by Barclays. There’s an annual £150 SIPP admin fee and, if you’re in flexi-access drawdown, there’s an additional annual £120 fee. That means Barclays comes out as quite an expensive option for a SIPP. Given that it’s administered by AJ Bell, you might want to go directly through AJ Bell. They also charge 0.25% in annual fees (reduced to 0.10% for accounts holding £250k – £500k, and removed altogether for accounts holding £500k+), but you’ll avoid the costs of using a third party provider that you’ll incur with Barclays, and AJ Bell’s dealing fees are also cheaper.

Transfer costs

There is no fee for transferring investments.

Interest on uninvested cash

When you open a Barclays Smart Investment Account, you’ll gain access to the Investment Saver service. This means you can earn interest on any uninvested cash you’re holding in your account.

Current rates of interest are:

• 1.65% The annual equivalent rate (AER) is used to describe the percentage of interest you’ll receive on your savings and investments. AER accounts for compound interest whereas the gross interest rate does not. AER is also known as APY (the annual percentage yield). AER/gross per year variable on balances of £1 – £10,000
• 1.15% AER/gross per year variable for additional balances of £10,000.01+

Those rates aren’t particularly generous, as you can see from this comparison chart:

The verdict

Barclays fares reasonably well compared to other high street banks and sits quite competitively among other non-high-street-bank providers too, unless you plan to trade non-UK assets.

The following three charts show ISA costs for Barclays customers, compared to high street neighbours, when trading (1) US stocks, (2) UK stocks, and (3) funds.

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