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Always remember that investments can go down as well as up in value, so you could get back less than you put in. A rule of thumb is to hang on to your investments for at least five years to give them the best chance of providing the returns you want.
What Is Our Overall Opinion of InvestEngine?
InvestEngine is an ETF-only investment platform, so it is an ideal broker for individual investors seeking to build a broad portfolio of ETFs, such as the popular three-fund portfolio.
While its range might not be as comprehensive as other platforms, the platform offers enough ETFs to cater for all tastes. There is no realistic asset allocation that cannot be recreated with InvestEngine’s shortlist of 580+ ETFs as long as investors are prepared to be flexible regarding the fund provider.
That said, InvestEngine is not for you if you are looking to invest directly in index funds, individual stocks and shares, or more complex trading instruments, such as forex or CFDs.
The fees charged (or rather not charged) within InvestEngine’s DIY ISA make it an easy recommendation for cost-conscious passive investors who are looking to save the next 0.1%. InvestEngine could be the cheapest available way for UK investors to hold popular equity ETFs. We anticipate that when investors wake up to this realisation, InvestEngine will begin to attract sizeable inflows from clients moving their holdings from other brokers.
Even the managed account undercuts its nearest competitors by over 0.2% on average, which will see it rise to the top of beginner investor preferences.
The many novel features of InvestEngine’s clean interface, such as One Click Rebalancing, make building a portfolio simple and empowering.
This cost-saving comes at the expense of uncertainty, which you’ll need to weigh up. Will fees remain this low forever? Will InvestEngine succeed with its undercutting strategy within such a competitive marketplace? This reviewer cannot provide the answer to these questions at this point in InvestEngine’s journey. But we anticipate that many investors will believe these tangible fee savings will make a jump worth the risk.
Contents:
InvestEngine, established in 2016 by founders Andrey Dobrynin and Simon Crookall, is an online investment platform that is gaining recent recognition in the financial sector. One year ago, it reported £70m assets under management and 10,500 clients.
InvestEngine has gained recognition for its innovative approach to investing, emphasising accessibility and automation.
This review aims to provide an impartial evaluation of InvestEngine’s services and offerings.
We’ll objectively assess the various aspects of InvestEngine, including its investment options, security protocols, and its unique one-click rebalancing feature. We opened an account and invested with InvestEngine to bring you the best insights into the typical client experience.
Our aim is to present a balanced overview, allowing investors to make informed decisions based on the merits or demerits of InvestEngine’s offerings. Whether you are an experienced investor or a newcomer to the financial markets, this evaluation will help you better understand what InvestEngine has to offer compared to other online investment platforms.
Before we take a close look at the service of InvestEngine, let’s answer the question, “Who is InvestEngine?”.
InvestEngine began its life as a company in 2016. However, it has only been actively trading as an investment platform for a handful of years. Our research reveals that the firm first appeared on the FCA register on 7 January 2019. Furthermore, its most recent set of publicly available financial statements covering the year ended 30 April 2022 discloses total revenues of just £16,783.
That’s because, from the perspective of the public, InvestEngine was officially launched in 2021, and like many other fintech startups, it simply enjoyed a long gestation period while its platforms and regulatory underpinnings were being developed. For example, its accounts show an overhead spend of £2m in the lead-up to its launch.
The firm only recently began a serious marketing effort to attract investors and build a client base to be able to operate at scale. We’ll therefore review InvestEngine as a brand-new platform.
InvestEngine (UK) Limited, the London-based company behind the brand, holds authorisation from the Financial Conduct Authority (FCA), with registration number 801128.
Money and investments held in an InvestEngine account are covered by the Financial Services Compensation Scheme, which means that you are covered up to £85,000 in the event of the firm failing.
This is the standard level of regulation and protection that applies to other UK-based fully-regulated stockbrokers.
While InvestEngine has a large shareholder in the shape of Gumtree Founder Simon Crookall, it is also partially owned by its clients and other investors. That’s because InvestEngine raised £1.3m in crowdfunding in June 2022, followed by a £2.4m raise completed in March 2023, with each funding round attracting contributions from over a thousand investors.
If you’re aware of the wide array of platform choices for the typical UK investor, you may be wondering:
“What makes InvestEngine different from other online brokers?”
“Why would I choose InvestEngine instead of its many strong competitors?”
Well, we were given an insight into the positioning of InvestEngine from an interview with the co-founders in 2022. Andrey Dobrynin told Altfi that “other platforms promote, in our opinion, short-term speculative behaviour. They push the trending stocks. What’s hot with other investors, while that really shouldn’t matter for the long-term investor.”
InvestEngine’s strategy is to encourage its investors to take a long-term view by offering a focused range of exchange-traded funds (ETFs).
ETFs are a popular style of collective investment scheme. Each ETF holds a basket of underlying stocks, shares, bonds and other investments. Investors can buy shares in the ETF and, through this holding, access the price changes and income produced by the underlying assets.
The diversified nature of ETFs can make them sensible choices for beginner or advanced investors, but crucially, they also reduce the temptation to buy and sell individual shares on a whim or in response to news. The composition of an ETF’s assets is managed by a professional fund manager, either with reference to an external benchmark (such as the FTSE 100 index) or at their own discretion.
This focused product offering seems to be working. InvestEngine was awarded “Best ETF Investment Platform 2023” by Which?, the consumer group.
While the slow and steady nature of ETF investing may not release as much dopamine as other investing apps that ‘gamify’ the experience, InvestEngine is perhaps hoping to earn the trust of clients by instead focusing on helping them achieve the best financial results. It appears to do this by:
InvestEngine currently offers a Stocks and Shares ISA, general account, and business account and is getting ready to offer a Self-Invested Personal Pension (SIPP) account, but in this review, we’ll focus on the favourite investment account for the UK investor: the Stocks and Shares ISA.
Within an InvestEngine ISA, you’ll be offered two investment approaches:
The DIY or ‘Self-Managed’ approach is designed for investors who want full control over the individual ETF choices and the weightings that will make up their portfolio.
If you have a specific allocation in mind or prefer a specific ETF provider, the DIY approach will allow you to construct the portfolio of your dreams. With 580+ different ETFs covering various sectors, asset classes or geographical regions, this gives reasonable creativity to InvestEngine clients.
However, if you have a list of specific or obscure ETFs in mind, you may find they are not available on the InvestEngine platform, as the total universe of ETFs worldwide numbers over 8,000 at the time of writing, as tracked by Statista. InvestEngine publishes its full range of investable ETFs so you can search to your heart’s content before you join.
InvestEngine’s chosen ETF providers include market leaders such as BlackRock iShares, Vanguard, Investco and HSBC. You’ll find broad global equity funds, together with variety such as the following:
Absent from InvestEngine’s range are ‘Funds of Funds’ ETFs such as the Vanguard LifeStrategy series that invest in a portfolio of equity, bond and property funds to create a ‘one investment’ ETF. However, using those funds as a guide, you could recreate a very similar portfolio using similar individual building blocks.
Fees for the DIY ISA account are simply explained and low. Very low.
InvestEngine charges £0 annual account fee for using an ISA. This compares to the 0.15% fee charged by the famously cheap platform Vanguard and 0.45% charged by the largest platform, Hargreaves Lansdown.
You’ll be charged no commission on ETF purchases or sales either.
This combination of zero commission and zero account fees makes InvestEngine stand out in the market. These low charges mean that more of your pounds can be used to buy assets rather than help the bottom line of a stockbroker.
Some types of indirect fees cannot be avoided entirely. You’ll still pay a spread (the difference between the buy and sell price on the live stock market) and any charges applied by the asset managers that administer the ETFs. Such charges are reflected in the Total Expense Ratio or ‘TER’, which InvestEngine very prominently displays next to ETFs as you browse, which makes it very easy to compare the total costs of investment.
Bonus features that we loved included the ability to preview and analyse your portfolio as you build it. This is a colourful and effortless way to see how diversified you’ll be across geographies, sectors or asset types before you commit to a strategy.
We were impressed by the ‘One Click Rebalancing’ feature, which will come in handy as you top-up your portfolio at a later date. This simple button suggests a series of trades that will utilise any spare cash to bring your portfolio weightings back to your pre-defined target. Gone are the days of manually calculating how to split your deposit across each element of your portfolio - One Click Rebalancing lets the system do the hard work for you.
If you opt for the managed approach, InvestEngine will ask you to complete a short questionnaire about your investment goals and the amount of risk you’re comfortable with. Using these inputs, InvestEngine will instantly create a low‑cost investment portfolio to suit you.
This portfolio will be professionally monitored. But unlike the full-service managed account services offered by financial advisers and some other wealth management companies, you won’t receive support or annual reviews from a dedicated portfolio manager. Rather, based on your risk profile, you’ll be allocated one of InvestEngine’s model portfolios, which are reviewed continuously.
This is akin to you receiving a pre-designed food dish from a restaurant’s menu rather than a bespoke dish created for your individual palate.
The benefit of this ‘several sizes meets all’ approach is price - it only costs 0.25% of assets per year to upgrade to InvestEngine’s managed account. In comparison, Nutmeg and Wealthify’s similar offerings are priced at 0.45% and 0.60%, respectively.
As with the DIY ISA, InvestEngine is deliberately undercutting the competition with its management fees. This will help it win clients, but this reviewer cannot be confident that fees will remain the cheapest in the market forever.
As a new business, InvestEngine currently trades at a loss, which is clearly not sustainable. Its management will be hoping that as the firm grows, its revenue will scale up much faster than its cost base due in part to the use of automation. InvestEngine will only be able to keep fees this low if it continues to grow at a quick pace and keeps costs under control.
As this is only the second year since the product launch, it’s simply too soon to tell whether this business model will be successful in such a competitive marketplace. This is part of the risk of trying a new product - you cannot be sure that it will still be around in a similar form a decade from now.
However, in the event that InvestEngine were to cease trading, investors should be protected from the worst. According to statements on its website, the firm ‘ringfences’ client assets in accordance with FCA rules, which will enable the simple transfer of assets (or sale then cash transfer) to another broker in the continuation of your investment journey. Fees and deductions by administrators may apply.
We opened an account and bought our first ETF for the purposes of this review in under 5 minutes.
We signed up via the InvestEngine website and found the registration process to be slick and unobtrusive. After providing some personal information, verifying our email address, and entering bank details, we were immediately offered the chance to order some ETFs as part of the sign-up process.
To speed up deposits in a secure fashion, InvestEngine utilises the ‘TrueLayer’ Open Banking protocol, which allows near-instant transfers into your investment account, authorised via your banking app. The platform also applies a high level of encryption (SSL 256‑bit) across your interactions with the platform via your web browser.
After opening an account, thoughtful investors can take as long as they like to design their ideal portfolio before hitting that ‘invest’ button.
InvestEngine sits near the top of UK investment platforms with a 4.5/5.0 score on the customer experience aggregation website Trustpilot (at the time of writing).
As of the time this review was written, 851 client reviews comprised this score. 78% were for five-star service.
It feels only fair to also credit InvestEngine in this section with their strategy of putting investor performance first when designing their business model. Encouraging regular, unemotional investments into diversified funds is an example of a broker following the ‘best practice’ and giving clients the best opportunity to perform successfully over the long run.
We could contrast this with traditional brokerages that encourage their clients to constantly change their funds or actively pick stocks (paying steep commissions each time), an activity that benefits the bottom line of the firm rather than the client.
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