Freetrade have launched their much anticipated SIPP product to complete their suite of online accounts for investors.
Launched in 2018, Freetrade is one of the few investment platforms to offer commission-free trading to investors across a wide range of shares, ETFs and investment trusts. Whilst trading on Freetrade is completely free, there is an account fee associated with the SIPP product which is currently £9.99 a month. Does this represent good value? Well, the answer to this very much depends on the size of your pot as well as the frequency of your trading activity.
Freetrade have claimed that their SIPP will be the cheapest of its kind for savers who only hold shares, investment trusts and ETFs. Coming in at just £119.88 per year, there are no other associated costs with the exception of a 0.45% FX rate in addition to the spot rate, which still represents good value with most providers charging 1% for buying shares from overseas.
We compared this to AJ Bell who currently have one of the most competitive offerings for their SIPP product. AJ Bell charge an account fee which is billed at 0.25% of the total value of your pension pot. However, this is capped at £100 a year, representing excellent value especially when it comes to very large pension pots. Whilst this may at first appear to have beaten Freetrade when it comes to value, there are other costs associated with AJ Bell, including £9.95 for buying and selling shares, as well as the 1% FX rate in addition to the spot rate for buying shares from abroad. AJ Bell also charge a transfer out fee of £9.95.
However, if you are a set it and leave it type investor, who would rather take advantage of the range of funds available at AJ Bell, then this would still represent excellent value that would be hard to beat. It is also worth noting that there are no funds available at Freetrade although their freemium business model which can be accessed via their award-winning, innovative app is still extremely popular, especially among millennial investors.