The Moneywise stocks and shares ISA review
The best stocks and shares ISA for you will depend on whether you favour funds or shares and how frequently you expect to buy and sell. Regular traders for example should seek out frequency discounts while fund investors should focus on fund discounts, commission rebates and annual or quarterly administration fees, taking care not to pay for services they won’t use.
The size of your portfolio and the amount of money you have to save each month may also dictate your choice.
Here we review some of the best stocks and shares ISAs as well as some of the most prominent, but check out our comparison service for all the details including charges, investment choices and additional services before picking the right choice of you.
ABERDEEN UNIT TRUST MANAGERS - Aberdeen ISA
Product summary: Access 31 Aberdeen funds with no platform fees or charges.
Moneywise verdict: This is a cheap way of accessing unit trusts from an excellent fund house, but serious investors may benefit from paying a small fee to access a much wider range of funds.
ALLIANCE TRUST SAVINGS - Alliance Stocks and Shares ISA
Product summary: Low quarterly fees and no inactivity penalties for a broad choice of investments.
Moneywise verdict: Cheap access to a wide variety of investments but higher dealing charges will put off regular traders. Watch out for transfer-out penalties too.
AXA SELF INVESTOR - Smart + ISA
Product summary: 2013 investors save £48 annual service charge. No transaction charges but percentage-based fee applies each month.
Moneywise verdict: Percentage-based fee means this account offers better value for money for larger, more active investors. Only offers a limited choice of funds.
BEST INVEST - Stocks and Shares ISA
Product summary: Among the cheapest for dealing charges, no annual fees. Incentives include loyalty bonus and up to £500 towards exit fees.
Moneywise verdict: Low cost for fund and shares investors, but regular traders don’t benefit from additional discounts. Minimum investments are higher than many of its rivals.
Product summary: Low cost access to broad range of funds, but only available from independent financial advisers.
Moneywise verdict: A good value fund platform for people who are paying for investment advice.
Product Summary: Access low, medium and high-risk managed portfolios and only pay management charge. Or select alternative funds from Co-funds platform.
Moneywise verdict: An innovative idea for investors who aren’t confident making their own fund choices.
F&C MANAGEMENT - F&C Investment Trust ISA
Product Summary: Build a portfolio of investment trusts from F&C. Annual and dealing charges apply.
Moneywise verdict: F&C has some quality trusts but the annual fee appears high for a limited range of investments.
FIDELITY WORLDWIDE INVESTMENT - Funds Network ISA
Product summary: Access to a broad choice of funds, investment trusts and ETFs but not shares.
Moneywise verdict: Low-cost investing for regular savers who do not want to hold individual shares in their ISA.
HARGREAVES LANSDOWN - Vantage Stocks and Shares ISA
Product Summary: No charges for buying funds, share dealing costs become more competitive the more you trade.
Moneywise verdict: This is a good low-cost all rounder but less frequent share traders could get better value for money elsewhere.
INTERACTIVE INVESTOR - ISA
Product summary: Rebates all fund commission back to you and quarterly fee includes free trades.
Moneywise verdict: Higher rebates on fund commissions make this a sensible choice for investors with larger portfolios but quarterly fee could hit those with a buy and hold strategy.
INVESCO PERPETUAL - ISA
Product Summary: Access 38 Invesco Perpetual unit trusts without paying any platform or dealing charges.
Moneywise verdict: A cheap way of accessing funds from a well-respected manager, but investors may be better off paying a fee to access greater investment choice.
KILLIK AND CO. - Stocks and Shares ISA
Product Summary: Advised service – each client has own broker. Charges are a percentage of the amount you invest.
Moneywise verdict: Many investors will value advice but the charging structure means this ISA will only offer value for money for investors with sizeable portfolios.
M&S BANK - M&S ISA
Product summary: Fee free access to four Marks & Spencer unit trusts.
Moneywise verdict: Low minimum investments make this an affordable option for smaller investors, but the fund choice is restricted and uninspiring.
NATWEST - Natwest Broker Line Self-Select ISA
Product summary: Run by TD Direct Investing. No annual fee for accounts of £10,000+ or with four trades in previous year.
Moneywise verdict: Benefits of low – or possibly non-existent – annual fee could be wiped out by above average dealing charges on shares.
A collective investment vehicle (known in the US as a “mutual” or “pooled” fund) and similar to an Oeic and investment trust in that it manages financial securities on behalf of small investors who, by investing, pool their resources giving combined benefits of diversification and economies of scale. Investors buy “units” in the fund that have a proportional exposure to all the assets in the fund, and are bought and sold from the fund manager. The price of units is determined by the value of the assets in the fund and will rise or fall in line with the value of those assets. Like Oeics (but unlike investment trusts) unit trusts and are “open ended” funds, meaning that the size of each fund can vary according to supply and demand of the units form investors. Unit trusts have two prices; the higher “offer” price you pay to invest and the “bid” price, which is the lower price you receive when you sell. The difference between the two prices is commonly known as the bid/offer spread.
Investment trusts are companies that invest money in other companies and whose shares are listed on the London Stock Exchange. As with unit trusts, private investors buying shares in an investment trust are buying into a diversified portfolio of assets (to reduce risk), which is managed by a professional fund manager. Investment trusts differ from unit trusts in two important ways: they are listed on the stockmarket and so are owned by their shareholders and are closed-ended funds with a finite number of shares in issue. This means the share price of investment trusts might not reflect the true value of the assets in the company (known as the net asset value, or NAV) and if the NAV value of a share is £1 and the share price in the market is 90p, the trust is said to be running a discount of 10% to NAV. But this means the investor is paying 90p to gain exposure to £1 of assets. Investment trusts can also borrow money and use this money to buy investments. This is known as gearing and a geared trust is thought to be more of an investment risk than an ungeared one.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
Sometimes known as a trading ISA, a self-select ISA gives investors full control over which assets to include in their ISA, allowing them to choose individual shares and bonds rather than investment funds. Aimed mainly at experienced investors and subject to the same investment limits of a regular ISA, a self-select ISA will usually be managed by a stockbroker on an investor’s behalf.