IG Group has launched a range of model investment portfolios which are focused on fee transparency, as the provider criticised some rivals for leaving investors in the dark about the true cost of investment.
The five model portfolios, which are made up of iShares exchange traded funds, are built using insight from asset management giant BlackRock.
Ian Peacock, head of UK and Ireland at IG Group, pointed to research that showed investors are still being blindsided by fees, despite many being confident about handling their own investment choices.
Mr Peacock said wealth management providers often “fall short” when it comes to transparency on fees of direct-to-consumer offerings.
“Hidden charges materially eat into investment returns and it is crucial that providers are transparent about all fees upfront, so that investors know the exact costs they will incur,” he said.
IG Smart Portfolio Fee Structure:
| Total Value of IG Smart Portfolios | On the first £50,000 | Between £50,000 - £250,000 | Over £250,000 |
| IG management fee (%) | 0.65% | 0.35% | 0.10% |
| Average ETF costs* % | 0.25% | 0.25% | 0.25% |
| Total Cost of Ownership (TCO) | 0.90% | 0.60% | 0.35% |
The low cost of ETFs, combined with IG’s low management fees, aim to help maximise returns in the portfolios for investors, according to Mr Peacock.
The ETF-based portfolios are rebalanced and continuously monitored by IG’s portfolio management team to respond to market conditions.
None of the portfolios have set-up, dealing, rebalancing or exit fees.
Scott Gallacher, chartered financial planner at Rowley Turton, said: "Obviously it is cheaper investment management when you look at the overall costs, but it is still a passive solution.
"I would argue that an asset allocation with a passive solution could probably be achieved with the likes of Vanguard for similar, or possibly cheaper, asset management fees, so it is not necessarily earth-shattering.
"The question is what added value does IG give by just putting the asset allocation together? I'm not sure that justifies their fees if they are just building a portfolio of passives."
katherine.denham@ft.com
