I suspect the fee would have to be significantly higher if it was a percentage fee capped at Ā£3. It would also be harder to predict as well. Imagine if there was a percentage capped fee, where 90% paid about Ā£1 per month then the other 10% would have to pay Ā£21 per/month.
I take @saf point about having to increase the top end to get the same revenue but surely that is fairer than penalising the low end (which to my mind really goes against FTās aims). The reality is that at the moment (and of course Govt policy can change, but that is also true for ISAs as much as any other form of investment/saving) for people starting from nothing or very low invested amounts then the FT ISA is not only not worth it but will cost more than the benefit.
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Iām curious which mutual funds you own @LemonyLicket where the ETF equivalent has a higher fee?
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One example is you have iShares Core MSCI World UCITS ETF GBP Hedged (Dis... ETF | IE00BD45YS76
vs Fidelity Index World Fund P Accumulation|GB00BJS8SJ34
You also have VWRL at 0.25%, while the equivalent and arguably better fund, Vanguardās global all-cap, is at 0.24%.
I only have a small portfolio currently but have a Freetrade ISA. I thought about having a GIA and building it up 1st but I felt uncomfortable with it. After thinking for a few days I knew I would open an ISA as soon as I could on April 6th. I always weigh things up in my head after a few sleeps on it to see what I truly feel comfortable with. I want tax free, stress free, uncomplicated investing. Ā£3 a month is straightforward, competitive, clear and transparent to all. Everyone must do what they feel comfortable with. As a percentage cost the fee will become smaller and smaller in my portfolio. I only have 7 positions, ETFās and investment trusts and have a minimum of 2 dividends a month, sometimes 3. The compounding and growth will reduce the fee percentage. Iām very optimistic and very comfortable with my Freetrade ISA 
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Is there any revenue Freetrade can gain from GIAās now or in the future other than instant trades ?
Morning,
The other posters have pointed out a few examples, granted it is rare for the same fund to be available as a mutual and an ETF.
However for just a passive tracker, mutual funds are by and large cheaper, an ETF does carry additional operational overheads which are passed on. A great example is FTSE All-Share by HSBC
HSBC FTSE All Share Index Fund - GB0030334345
That has an ongoing fee of 0.02% which is cheaper than the ETF competition (they seem to be coming in at 0.20% https://www.justetf.com/uk/find-etf.html?assetClass=class-equity&country=GB&index=FTSE%2BAll-Share )
I generally use mutual funds for active management, not for trackers. Itās the same reason I like investment trusts.
A great write up on this has been done by Vanguard (who naturally are on the side of mutual funds, also keep in mind this is from 2015 so ETFs have come along massively since then!)
https://www.vanguard.co.uk/documents/adv/literature/choosing-between-etfs-and-mutual-funds.pdf
I like and use ETFs however a lot of the benefit is intraday trading, liquidity by market markers, and transpancy on the share allocation (you know the trade has happened and at what price etc.)
However, when Iām taking a longer term view the intraday trading and liquidity isnāt as high on my list. I really like the added transparency as mutual investing is a black box until you see the units/cash.
Mutual funds are also fractional out of the box which is good for maximising my allocation, I donāt have to rely on fractional shares being offered by my broker and the complicity around who owns the fractions as the firm owns the whole unit and sells me the fraction.
For me personally Iām not ready to move away from ETFs just yet as the coverage isnāt there. There are situations where an ETF is doing something very unique that doesnāt exist as a mutual in which case I buy it (Iām not against ETFs!)
I hope that clears up what I meant.
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Yes iām switching to iweb. Used to be with cavendish but moved because they only had funds so actually quite limited.
Bit slow to get back to you here, but wanted to look that up as itās quite a fee gap!
When you Google ālowest cost fund UKā that fund comes up in a few comparison articles as the cheapest, but itās the institutional class of shares. Is it investable for retail investors? My HL account brings up a retail class for the same fund with 0.17% ongoing charges (still lower than the 0.2% for the equivalent SPDR ETF available on Freetrade).
Lots written out there about the cost difference between ETF and mutual funds. Iād say best to stick with a UK analysis as ETFs are cheaper in the States (plus we canāt buy them) and mutual funds have more hidden fees over there.
Hereās an interesting one from our friends at Nutmeg.
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Amundiās ETFs charge 0.05%, which is cheaper than most other ETFs and mutual funds. But unfortunately arenāt on Freetrade (yet).
Excellent reply thank you!
With so much information and noise it can be a bit overbearing to stay on top of it all.
I donāt think youāre supposed to be able to buy them, but occasionally mistakes are made. I once managed to buy shares in an HSBC fundās institutional class at 0.0% charges. Very pleased with my brilliance, I watched it consistently underperform a global index tracker for a couple of years 
Guess I learned that the difference between an etf/fund at 0.75% and another at 0.1% is significant, but not so much between 0.1 and 0.0.
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To clarify a few things:
- We never, ever make any money on spreads. Thatās not our business model at all.
- Nor do we lend stock to CFD providers - afaik CFC providers donāt need stock to back the contracts anyway
We have a Ā£3 flat fee because we think itās fair and reflective of what an ISA costs us. We donāt think itās right that a long-term savings product charges you more at the end of use than the beginning when itās basically the same service from your broker - thus no % fees.
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I think the business model for the ISA is fine - my ISA is with FT and itās currently free as they havenāt started charging for it yet.
But how interesting of you to sneak in your referral links for DeGiro and Trading212 on Freetradeās forum! 
I hope youāre just as proactive with FTās free share referral link!
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The savings I have made with Freetrade over other providers - in trade or management fees - is enough for me to accept this cost.
I have prepared for the fee by buying enough of an ETF that pays out Ā£3 monthly to cover it. Yes I will lose Ā£36 in dividends per year but I see it as it isnāt costing me anything.
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Agreed, given that you can easily pay around Ā£12 a trade, Freetrade enables regular investing at a lower yearly cost.
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My main sticking point for moving to Freetrade S&S ISA is the lack of SRI and similar ETFs. Once there are more of them, Iāll consider a move from Vanguard.
Moving over soon?
Iām using Freetrade next tax year 
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