Fund platform or Investment platform is an online service that allows investments to be bought online, such platforms usually simplify the process of investing in investment funds and may provide them at a discounted rate.
In many cases the investments purchased can then be held on the Platform in a range of tax efficient wrappers. Shares, bonds and a range of funds from different fund managers can be held in many of them. The investments that can be purchased via each Platform varies depending on the service provider.
These fund platforms are not really products, they are services that enable investors to buy and often hold their investments online all in one place, with a degree of flexibility to switch investments around as their lives change without having to keep paying high charges for buying and selling them. Many provide the opportunity to buy assets in-specie, which helps the investor to switch investment without unnecessary charges. These services also cut down on paperwork as transactions are centralised.
Although Fund Platforms are a way to invest using DIY ethic, many investors choose to take independent financial advice, in the selection of a fund platform provider, in the selection of funds and ‘tax wrappers’ and in the ongoing monitoring of performance.
Fund platforms fall into two distinct groups: fund wraps and fund supermarkets. Wrap services are online services where investors access their account details online. Fund Supermarkets are generally more transactional and are used for buying funds cheaply online – either by a financial adviser (on behalf of a client) or by the investor themselves.
In the United Kingdom, individual investors can usually hold a range of investments within several different types of ‘tax wrapper’, such as:
- Individual savings accounts (ISAs)
- QSPs or MIPS
- Personal equity plans (PEPs)
- offshore or onshore investment bonds (also called insurance bonds)
- personal pension plan, either insured personal pensions or Self-invested personal pension (SIPPs).
The investments you can buy via these services and often hold on the platform itself can include:
- direct mutual funds (i.e. Unit Trust or OEIC) or investment trust or SICAV holdings
- individual equities, corporate bonds
- hedge funds
- structured products
- property partnerships.
- ^“Which online fund platform is the cheapest?”. Financial Times. November 30, 2016.
- ^Rosie Murray-West (November 13, 2015). “How an investment platform works and how to use it”. The Telegraph.