Investment platforms fall into two groups: Wrap and Fund. Both are services that enable investors to buy investments simply online – usually at a discounted rate. In many cases the investments purchased can then be held on the platform in a range of tax efficient wrappers. The investments that can be purchased via each Platform varies depending on the service provider.
Fund Platform (aka Fund Supermarkets)
A fund supermarket is aimed at allowing an investor a wide choice of investment funds, usually with a discount to the standard fees. Most investment funds carry initial and ongoing annual fees. Initial fees can be as high as 6%, and anual fees as much as 2.5%. By using an online supermarket these costs can be greatly reduced or even removed.
A wrap platform focusses on the vehicle in which investment funds can be purchased. Typical 'wraps' include ISA's, Pensions, QROPS, Offshore & Onshore Bonds and Trusts. These wraps offer a variety of tax efficient benefits and functionality.
It is now increasingly common for an online platform to include a fund supermarket and a wrap service, so that investment funds can be purchased at a discount and placed into a tax efficient environment.
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