With the launch of its ETF Quicklist, Lloyds Bank is trying to lure customers into the DIY investment space.
The bank, in collaboration with BlackRock, has compiled a list of 16 iShares ETFs for investors.
This follows Monzo launching its DIY service Monzo Investments, also in partnership with BlackRock, a sign that banks are looking to grow their business in this area.
Lloyds Bank has launched a limited list of ETFs to make it easier for investors to choose from the many thousands of ETFs on offer
Lloyds launched a ready-made investment service in July. The new ETF Quicklist is touted as a “simple and cost-effective investment option.”
There is a semi-annual administration fee of £20. If you do not have a regular investment plan, an additional £11 trading fee will apply.
Therefore, it is only cost effective if you have a larger pot to invest or are trading large amounts.
Lloyds’ pre-built portfolios through its investment service incur a monthly account fee of £3, with annual fund fees ranging from 0.21 to 0.23 per cent depending on which of the three portfolios are held – Cautious Managed Growth Fund 2, Balanced Managed Growth Fund 4 or Progressive Managed Growth Fund 6.
The ETF Quicklist allows customers to choose the ETFs they want through a stock trading account or ISA, accessed through their banking app or online.
The ETF list is divided into four categories: Themes, Global, Bonds and Trending Now, which include ETFs ranging from UK real estate to healthcare.
Manuel Pardavila-Gonzalez, managing director of Lloyds Bank Investments, said: “Investing should be hassle-free, affordable and accessible to all customers and our new ETF Quicklist provides an easy way to start your investing journey.”
What are ETFs?
Exchange traded funds or ETFs are stocks listed on stock exchanges and can therefore be bought and sold throughout the trading day.
Traditionally, they clone a market index and, like a tracker fund, are managed passively and therefore cost-effectively. However, there are many variations across many sectors, so as with any investment, you need to do your research on them.
“ETFs are a great option for people who want to build and manage their own portfolio. They are easy to understand and offer investors a low-cost, diversified range of investments.”
Banks have tried to lure investors away from DIY investment platforms, but this is not a new phenomenon.
Henry Tapper, managing director of pensions comparison service AgeWage, said: “Lloyds Bank is perhaps the first and largest bank to move into this space with its purchase of Embark Group in 2022, while Monzo is a well-known example of a digital bank.” the search for diversification in the area of private investors.
“Part of the reason for these moves is that banks have understood that the revenue they generate from traditional banking operations is limited and dependent on external factors, such as interest rates.”
“So this step makes perfect economic sense.”
Justin Modray, boss of Candid Financial Advice, agrees that banks are introducing these services to increase sales when loyal customers invest excess savings, especially when it can be done in just a few clicks.
But they are also looking ahead to the next generation of investors. Challenger banks are a customer group with a natural affinity for digital services that needs to be tapped into.
The initial demand for Monzo Investments was so great that the waiting list for the service grew to 200,000 within two days.
The Lloyds Bank ETF list is divided into four categories: Themes, Global, Fixed Income and Current Trends.
Mike Barrett, commercial director at financial services adviser Lang Cat, said: “Services like this are aimed at a different customer to existing investment platforms, which are clearly first-time investors.”
“If you are an experienced investor or are already investing elsewhere, I suspect you will find the options too limited. Notably, Monzo only has three Blackrock funds to choose from.
“But for those just starting out who find choosing funds from a list of thousands on one platform too much, they are a great option.”
There are, of course, many retail platforms where you can buy BlackRock funds, and Modray warns: “Banks have traditionally been a poor option when purchasing mutual funds as selection has often been limited and costs are high.”
He says: “Lloyds’ monthly account fee of £3 equates to 0.36 per cent on £10,000, so could prove extremely expensive for smaller investment pots, but increasingly cheaper for larger ones.”
“Comparative investment platforms are cheaper. “Vanguard, for example, which offers a wide range of low-cost index tracking finds, has a much lower annual account fee of 0.15 percent.”
AJ Bell charges a trading fee of £9.95 for ETFs and an annual account fee of £0.25.
BlackRock says it will review the ETF quicklist at least every calendar quarter.
Compare the best DIY investing platforms and stocks and shares Isas
Online investing is easy, affordable and can be done from your computer, tablet or phone at a time and place that suits you.
When it comes to choosing a DIY investment platform, Stocks & Shares Isa or general investment account, the range of options can seem overwhelming.
Each provider has a slightly different offering, charging more or less fees for trading or holding stocks and providing access to a different selection of stocks, funds and mutual funds.
When choosing the right provider for you, it is important to consider the service offered, as well as the management and trading fees, as well as any other additional costs.
To help you compare the best investment accounts, we’ve gathered the facts and put together a comprehensive guide to choosing the best and cheapest investment account for you.
We highlight the key players in the table below, but encourage you to do your own research and consider the points in our full guide linked here.
>> This is Money’s complete guide to the best investment platforms and Isas
The platforms featured below are independently selected by This is Money’s specialist journalists. If you open an account through links marked with a star, This is Money will receive an affiliate commission. We will not allow this to affect our editorial independence.
|administration fee||Fee information||Fund trading||Standard stock, trust and ETF trading||Invest regularly||Dividend reinvestment|
|AJ Bell*||0.25%||Maximum £3.50 per month for stocks, trusts and ETFs.||£1.50||£9.95||£1.50||£1.50 per deal||More details|
|Bestinvest*||0.40% (0.2% for finished portfolios)||Account fee for ready-made investments reduced to 0.2%||Free||£4.95||Free for funds||Free for income funds||More details|
|Charles Stanley Direct||0.35%||No platform fee on stocks when trading this month and the annual maximum is £240||Free||£11.50||n/a||n/a||More details|
|Loyalty*||0.35% on funds||£7.50 per month up to £25,000 or 0.35% with regular savings plan. Maximum of £45 per year for shares, trusts and ETFs||Free||£7.50||Free funds for £1.50 shares, trust ETFs||£1.50||More details|
|Hargreaves Lansdown*||0.45%||The cap is £45 for shares, trusts and ETFs||Free||£11.95||£1.50||1% (min £1, max £10)||More details|
|Interactive investor*||£4.99 per month under £50,000, £11.99 over, £10 extra for Sipp||£3.99 per month back in free trading credit (not applicable on £4.99 plan)||£3.99||£3.99||Free||£0.99||More details|
|iWeb||£100 one-off (no fee until the end of 2023)||£5||£5||n/a||2%, maximum £5||More details|
|Accounts with some restrictions but attractive offers|
|Etoro* No Isa or Sipp||Free||The investment account offers stocks and ETFs. Beware of risky CFDs in the trading account||Not available||Free||n/a||n/a||More details|
|Free trade* No investment funds||Free for the Basic account, £4.99 per month for the Standard account and Isa £9.99 for the Plus account||Freetrade Plus with more investments and Sipp costs £9.99/month including Isa fee||No funds||Free||n/a||n/a||More details|
|Vanguard Vanguard proprietary products only||0.15%||Vanguard funds only||Free||Free Vanguard ETFs only||Free||n/a||More details|
|(Source: ThisisMoney.co.uk September 2023. The % administration fee can be charged monthly or quarterly|
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