Fund platform
Fund platforms fall into two distinct groups: fund wraps and fund supermarkets. Both are services that enable investors to buy investments simply online – usually at a discounted rate. In many cases the investments purchased can then be held on the Platform in a range of tax efficient wrappers. The investments that can be purchased via each Platform varies depending on the service provider too. Investment platforms like these are available in the UK. This type of investment vehicle, is provided by a Wrap Service or Fund Supermarket provider. Shares, bonds and a range of funds from literally hundreds of fund managers can be held in many of them but it does vary from provider to provider. Individual investors can usually hold a range of investments within several different types of 'tax wrapper', such as:
- Individual savings accounts (ISAs)
- EPPs
- QSPs or MIPS
- Personal Equity Plan (PEPs)
- offshore or onshore investment bonds (also called insurance bonds)
- personal pension plan, either insured personal pensions or Self-invested personal pension (SIPPs).
The investments you can buy via these services and often hold on the platform itself can include:
- direct mutual funds (i.e. Unit Trust or OEIC) or investment trust or SICAV holdings
- individual equities, corporate bonds
- cash
- EFTs
- VCTs
- hedge funds
- gilts
- structured products
- property partnerships.
These fund platforms are not really products, they are services that enable investors to buy and often hold their investments online all in one place, with a degree of flexibility to switch investments around as their lives change without having to keep paying high charges for buying and selling them. Many provide the opportunity to buy assets in-specie, which helps the investor to switch investment without unnecessary charges. These services also cut down on paperwork as transactions are centralised.
Wrap services are online services where investors access their account details online. Fund Supermarkets are generally more transactional and are used for buying funds cheaply online – either by a financial adviser (on behalf of a client) or by the investor themselves.
Many investors choose to take independent financial advice, in the selection of a fund platform provider, in the selection of funds and 'tax wrappers' and in the ongoing monitoring of performance.