Saxo is introducing dealing in mutual funds to its UK retail investors, who will now have the opportunity to invest in any of the thousands of funds that Saxo has selected, from leading money managers, such as Vanguard, Fidelity, BlackRock and JP Morgan.
Saxo fund investing
This new fund universe includes more than 500 equity funds, and more than 700 multi-asset funds, alongside 2000 fixed-income funds and 160 funds that invest in alternative assets.
Looking at the list of funds available from a sector perspective, there are opportunities to invest in biotech, industrials, and natural resources, technology, telecoms, utilities, healthcare, energy, mining, commodities, and more.
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Saxo is offering a competitive fee structure under which clients will be able to buy the funds with zero commission, no platform fees, and annual custody charges of 0.40% per annum, for classic account holders.
Saxo’s Platinum and VIP account holders will pay custody charges of 0.2% and 0.1%, per annum, respectively.
Speaking about the launch of the new service, the CEO of Saxo UK, Charlie White-Thompson said:
“The launch of Saxo’s fund offering overlaps a period of significant market volatility and geopolitical tension. I have consistently supported active management including mutual funds as an important part of any well-diversified portfolio.”
He added:
“We are in a new paradigm for markets following the heavy stimulus of rock-bottom interest rates and the resulting enhanced price performance. In a world where we cannot rely on this industrial scale central bank stimulation, we should tap into some of the finest brains within the asset management world, via funds, to assist and boost performance and help us navigate these volatile financial markets.”
Longer term investing
Saxo’s new fund offering follows hard on the heels of the introduction of funds to the CMC Invest roster. This is part of the drive within the industry to make brokerages and investment apps one-stop shops, that provide all the services and products that a customer needs.
The idea is to capture as much business as possible from every client account, rather than seeing potential income lost to a competitor.
Putting money into funds is synonymous with longer-term investing rather than short-term trading. As such Saxo’s new fund’s service could prove popular with its existing stocks and shares ISA customers.
The importance of research
However, those investors will want to do their research before taking the plunge, as mutual funds are not traded on a stock exchange, but rather directly with the fund manager, which could mean lower liquidity and wider bid-offer spreads, than you might find in equivalent exchange-traded funds or ETFs.
Investors will also want to consider the annual management fees charged by the fund manager, as data shows that high fees can dramatically reduce the investment returns of a portfolio, over the long term.
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