General investment account (GIA)
You can access both the managed portfolios and share investing from the GIA without limitations. It’s free to open an account and, once open, you will incur a yearly custody fee of 0.35% for share investing. This account also provides access to investment consultants.
Stocks and shares ISA
You get all the usual tax benefits by investing via the stocks and shares ISA but what makes the Moneyfarm ISA stand out from a lot of the competition is that it’s flexible.
What does this mean? Well, simply put, it means that you can deposit and withdraw your money from your ISA as many times as you like without affecting your ISA allowance for that year. Ordinarily, every deposit you make into your ISA would count towards your allowance (currently £20,000 for the 2023/24 tax year), regardless of whether you have also withdrawn from the account.
However, with a flexible ISA, each time you withdraw, that amount gets credited back to your allowance.
This isn’t an advantage for everyone, and with investments, it is always advisable to leave your money invested for a minimum of five years. However, there are circumstances where this can be a significant bonus.
Read more about ISAs
Junior stocks and shares ISA
The Junior ISA also provides access to Moneyfarm investment options and human advisors, but it is otherwise unremarkable. You can save up to £9,000 a year into this account, which your child will then be able to access when they turn 18.
It’s a decent option, and if you held your other accounts here, I can see how the convenience of having them all under one roof would be appealing. However, I still think the Hargreaves Lansdown Junior ISA is the best stand-alone product out there.
Pension
The Moneyfarm Pension comes with all the usual tax benefits of saving into a pension product. You will have access to a range of investment options to help your money grow towards your retirement, but this is pretty normal for a self-invested personal pension (SIPP). However, where the Moneyfarm SIPP does differ is in its access to expert guidance. This can be useful for retirement planning and knowing when to reduce your risk without sacrificing too much in potential investment gains.
While it is free to transfer your existing pensions into the Moneyfarm pension, you should first check for any exit fees your current provider may charge. There is also a free pension drawdown service when the time comes to retire. The pension calculator is one of the best I have come across, helping you define your monthly contribution amounts in order to hit your retirement targets.
The other thing to note is that it is possible for your employer to contribute to your Moneyfarm pension. You simply submit a form to register your employer, and Moneyfarm takes care of the rest.
So how does the Moneyfarm Pension fund perform when compared to industry peers? There are better performing pensions available as our independent analysis has revealed. Feel free to toggle between different cumulative years to get a picture of how historical returns stack up.
Read more about SIPPs
Portfolio performance
The most important question you should be asking is, ‘Will this platform make my money grow?’
This all comes down to the performance of the portfolios (unless you are engaging in direct share access, in which case the onus is all on you to research the best opportunities out there or check out our share tips page).
Below is a snapshot of how the portfolios have performed in the last 1-5 years when compared to similar platforms. These are interesting results, although I must take this moment to stress that you should not rely on historical performance as an indicator of future performance; however, it can give you an insight into how well the portfolio is managed.
Lowest risk portfolio for cautious investors – 5-year average 10.8%
Medium risk portfolio for confident investors looking for a balanced portfolio – 5-year average 22.8%
High-risk portfolio for adventurous investors – 5-year average 44.4%
It is worth noting that these figures do not include any data from InvestEngine, the newest and lowest-cost platform to enter the robo-advisor space. InvestEngine has failed to provide us with any data relating to the past performance of their portfolios.
Our senior equity research analyst had some pretty strong opinions regarding this data which you can read below.
Actively Managed
The actively managed portfolios will incur a greater cost to the investor, but in exchange, a team of investment experts will constantly monitor and adjust your investments in order to make the most of fluctuations in the marketplace and hopefully maximise your returns. This also means that your exposure to risk is kept in line with your risk appetite.
Moneyfarm invests in a diversified selection of ETFs on your behalf. It’s a great approach, especially if you have limited to no investment experience and would like experts to manage the entire process for you. However, the only way to establish whether this is a feasible option for effectively growing your money is to examine the historical returns minus the fund fees.
Fixed Allocation
This is a passive strategy, meaning your funds are left to grow in a diversified portfolio matched to your risk level. It’s a hands-off approach that will cost you less but the expectation is that you may not earn as much as you could with an actively managed portfolio.
Liquidity+
This is a new addition since the first time I reviewed this platform, so I decided to invest funds in Liquidity+ to test the process.
Liquidity+ is a low-risk way to keep up with inflation with very limited exposure to risk (just to be clear, there is still some risk involved, however small). Moneyfarm keeps this risk minimal by investing in a mutual fund that includes assets such as government bonds and commercial papers to provide a short-term option or a haven during times of market volatility. It’s a good option for scenarios like keeping tax money working hard to beat inflation while still having access to it when the taxman sends his bill. At the time of this review, Liquidity+ was offering a 5.3% gross annualised yield on savings. Take out the Moneyfarm fee of 0.3% and the fund fee of 0.10% and you are still earning 4.9%, which is decent in the current climate but won’t beat Moneybox’s cash ISA, which is offering 5.16% AER.
Share Investing
This is the latest development for Moneyfarm and feels like a step away from the robo-advisor space. It very much puts the onus on the investor to make the right decisions. There is a list of UK stocks to choose from, with more from the US and Europe in the pipeline.
There are also ETFs (exchange-traded funds) to choose from; however, these appear to be thrown in with the stocks, and can’t be separated, which feels like an odd way to present the two assets. The funds are provided by names such as Vanguard, iShares, and Fidelity.
I feel like there is a way to go until this becomes a great addition to the robo arm of the platform; however, it is early days yet for share investing and it will be interesting to see how this develops.
Socially responsible investing (ESG)
Socially responsible portfolios are available, using funds that contain assets that include companies that adhere to environmental, social, and governance principles. This is a fairly standard offering among similar platforms.
Thematic Investing
Thematic investing paves the way for investors to put their money towards long-term opportunities or trends affecting industries. This can include climate, sustainability and development.
Moneyfarm provides growth themes, which include disruptive technology, sustainability, society, and multi-trends. You will need at least £10,000 in your actively managed portfolio to add this option.
Robo Advisory services
When you open your account with Moneyfarm, you will automatically be steered towards some simple questions that are designed to match you with your perfect portfolio. Some of these may seem a little personal, but this is how Moneyfarm establishes your risk profile, financial goals, and investment knowledge. Expect questions about previous investment experience and knowledge of ETFs, your educational attainment, and reactions to market downturns.
Fact
Checked
Disclosure
Share
Read more
Verdict
Available
Not available
