How we think about funds at Freetrade 🥚🥚🥚

I don’t think most investors let the platform tail wag the investment dog. (Or at least, they shouldn’t.)

If freetrade want to be used by most investors, they should offer what most investors want to invest in.

That doesn’t mean all OEICs in existence. But it probably means a very limited selection of the most important ones that virtually everyone invests in.

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But undercutting them on price. Aldi/Lidl just look like Tesco/Asda but they’re slowly consuming them like a python eating an alligator

You could say the same about investing in individual shares as that’s the oldest option and research shows most people are terrible at picking winning stocks over time. I’m sure OEICs take in more money than ETFs in the UK and that won’t be changing any time soon. According to morningstar £VWRL only has $2.5bn invested and HSBC MSCI World $1bn…compared to Fundsmith at £17.5bn, Lindsell Train Global at £8.5bn and LifeStrategy at £15bn over the 5 options

I don’t disagree with any of that but I think the model portfolios is way to take the cost out but get the expertise. It ties nicely with fractional share dealing and free dealing.

Effectively a fund manager could just run there fund as a transparent portfolio of stocks on Freetrade, which investors could subscribe to. There are some issues and it’s some way off but doable.

I think Freetrade should continue working on their Investment Platform first and foremost.

I don’t believe Freetrade’s argument that they do not think Mutual Funds offer enough transparency or control. It’s just a question of focus, Freetrade are building a platform to buy and sell exchange traded securities. Mutual Funds are not exchange traded, and may have high minimum buy in. Freetrade would have to commit time to developing the software and agreements to trade mutual funds.

If Mutual Funds are a popular product elsewhere, they should be available on Freetrade, eventually.

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Vote for Lifestrategy to be added here, not sure if it will make a difference:

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@Freetrade_Team - really concise and clear explanation of the differences between fund types :+1: I will bookmark it and refer others to it in the future.

Like others on here I’m keen on Vangaurd’s LifeStrategy funds, both for myself and recommending to others. The fact that there isn’t an equivalent fund in the ETF universe (or is there ??? ) is the main reason I’m frustrated by Freetrade’s decision not to support OEICs.

I know I could build a LifeStrategy-equivalent using equity and bond ETFs but ideally I don’t want to have to bother with manual re-balancing and manual dividend reinvestment that this would require. Perhaps more importantly, these issues prevent me recommending Freetrade to others if I think they are unlikely to engage in these tasks.

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The only thing I don’t like about the Lifestrategy funds is they are heavily weighted towards the uk.

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Yeah, that’s the most common complaint about it. But I think there are other similar OEICs (i.e. providing packaged global mix of equity and bond indexes with automatic re-balancing) from other fund managers with a smaller UK weighting.

Thanks for this, very informative summary. :+1:

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Is there any change in FT stance to mutual funds now they are adding support for SIPPs?

I know most other providers charge a 0.25% annual custody charge for holding mutual funds, is there a cost to ft to hold them if they were added?

Freetrade’s SIPP may potentially struggle unless Mutual Funds are added as this is what most investors hold in their pensions. There must be some solution?

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Perhaps not - the SIPP I have with another provider has ETFs only.

Of course that’s fine for some but the masses on HL and AJ Bell are in mutual funds.

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