CMC Invest Review: An investing app that lets you deal for free

CMC Invest Review

Name: CMC Invest

Description: CMC Invest is an investment app from the people behind the established trading platform CMC Markets. You can invest in 250 UK shares, over 1,100 US shares and 300 ETFs and investment trusts with no account charge or commission. CMC Invest also offer a Plus account which includes a stocks and shares ISA for an additional £10 per month.

Why we like CMC Invest:

CMC Invest is free and gives you access to the most popular UK shares, US stocks and ETFs, a great compliment for traders who want to also build a long-term investment portfolio.

Pros

• Free investing app
• Easy to use
• Backed by CMC Markets

Cons

• No fractional shares
• Limited market range
• No SIPPs

• Pricing
  (4.5)
• Market Access
  (3)
• Online Platform
  (3.5)
• Customer Service
  (4.5)
• Research & Analysis
  (3)

Overall

3.7

Richard’s Review

A while ago I had a bit of an email spat with Ben Martin from The Times because the mainstream media were constantly getting the products offered by trading platforms wrong. Back in 2020 he said that CMC Markets already had a share trading service. His article was about whether or not Plus500 would introduce share dealing to compliment it’s CFD product and said that “IG Group and CMC Markets, rivals that also sell contracts for difference, similarly have smaller share trading services”.  At the time, IG did, but in the UK CMC Markets did not. However, I had to concede to him being technically correct because CMC did have a stock brokerage service, but only in Australia.

But, now CMC Markets do in the UK, it’s called CMC Invest, and as the name suggests, it lets you invest in the stock market for long-term capital gains, as opposed to CMC Markets, which lets you speculate in the short-term through CFD trading and financial spread betting.

What can you invest in with CMC Invest?

Since launch, they have increased the number of UK stocks from 100 to over 250 UK shares, 1,100 US shares and around 300 ETFs and Investment Trusts.

It’s still a relatively small universe of potential investments when you compare it to incumbent DIY platforms like HL and II. But at this stage that is not really too much of a bad thing for an established brand. CMC Markets has always excelled in building excellent in-house tech for traders to speculate on the most liquid and popular markets cheaply. And in reality, most of the volume that goes through trading platforms is in the top ten traded assets like the FTSE, Lloyds shares, and EURUSD. Having loads of peripheral markets is great, but actually, all people want is to trade and invest in is what everyone else is trading and investing in.

When I opened an account with CMC Invest, it took less than a minute to get up and running and fund it with £500 to get started. Obviously, this was helped in part by the fact that it links to my existing CMC Markets account, reducing the need for additional KYC.

You can only invest in a General Investment Account and stocks and shares ISA at the moment, so if you want tax-efficient retirement investing you’ll have to look elsewhere for a SIPP. Obviously, pension products are coming soon. You can also choose to invest by shares or amount, but unlike other investing apps where you can choose to buy £100 of something through fractional shares, CMC Invest rounds the purchase down to the nearest amount of whole shares. This was a shame because for this review I was going to try and buy the five ETFs, that our man Jackson Wong suggested were all you need to build a globally diverse portfolio including the FTSE, a world ETF, gilts, property and gold. But of those he suggested, not all were available on the app. So in two different ways, I couldn’t just buy £100 of each. So instead, I backed Britain and bought £500 worth of an American-owned ETF that tracks the performance of the FTSE 100 (VUKE).

How much does CMC Invest cost?

It’s free to invest with CMC Invest basic account. The Plus account has a £10 per month subscription fee that includes an ISA, smaller cap stocks, and a USD wallet. Thankfully though for those getting started Meridyth Park, the Head of Marketing for CMC Invest told me there will always be a free version. But as with all investing, there are other costs involved. For example, when I bought those 16 shares in the Vanguard FTSE 100 UCITS ETF, there were no charges levied by CMC Invest, but you still have to pay the Vanguard investment management fee, which is what Vanguard charge for providing and managing the ETF. There is no way around these fees with any investment app, for that particular ETF the cost is 0.09% (£10.20 a year which is about £51 over a five-year period).

It’s really good to see CMC Invest display these charges on the dealing ticket, because most investing apps I see hide this in the small print somewhere or do not really explain exactly what it is.  It’s handy to see the fees calculated over a five-year timeline as well, as that is the average time most investing accounts expect to see people invested for.

CMC Invest also make money by charging 0.5% in FX fees when you convert GBP into USD. Which is fairly competitive, not as cheap as Interactive Brokers which charges 0.2%. It’s an important charge to be aware of though because US stocks are a massive gateway for new investors as they have had stellar returns, and are all over social channels, and are all household names so lots of those starting out investing will dabble in the US markets. The likes of Lloyds and Vodafone, don’t quite have the same appeal as investing in Netflix and Tesla (NASDAQ:TSLA).

How does CMC Invest compare to other investing apps?

This is a tricky one because I’m a great fan of CMC Markets, I think they have great tech, but at the moment I feel that this app has been a little rushed out. I know there is a massive race between trading platforms to offer longer-term investing products, but I was quite surprised to see such a basic app on offer and no web version. I’d have much rather seen their exceptional trading platform offer the ability to buy and sell physical versions of the assets that can be bought as a CFD or spread bet. I think Saxo Markets does this best as everything is all in one place and when you look at a market you can choose to trade as a future, a CFD or a physical share. IG also does it where you get the same app and desktop platform, but you login to a share dealing account rather than the trading platform.

But CMC Invest told me it hasn’t just been built to cross-sell to traders already signed up, it’s there to target an entirely different audience of long-term investors.

Compared to apps like Freetrade, it’s clear that Freetrade has better functionality, more markets and also SIPPs, but in my mind, Freetrade is too early stage to put any proper money into. They just seem to have grown too quickly and it makes me nervous. I’d prefer to invest through an app like CMC Invest which is backed by an already established, profitable and publically listed company (CMCX on the LSE).

Compared to the robo-advisors like Nutmeg and Wealthify, CMC Invest is much cheaper. If you are confident enough to pick your own investments, you can save up to 0.6% a year in fees. For example, if you have £10,000 on account, that is only £60 a year, but as your account grows, if you have £100,000 invested then that is a massive difference of £3,000 over five years. If you’ve got the time and inclination you can just take a look at any robo-advisor’s ETF portfolio and replicate it for free. You do not of course get the benefit of the portfolio being managed or rebalanced on your behalf though.

For a while, zero commission brokers have been seen as a marketing gimmick, but now as major brokers like Interactive Brokers look to compete in the free investing market, the bigger platforms have all moved to embrace low-cost longer-term investors.

Should you invest with CMC Invest?

I would, and I have, so yes if you have a trading account with CMC Markets, the CMC Invest app is a great place to start building your long-term investment portfolio.

CMC has always innovated, always been at the forefront of its industry, and always listened to client feedback. If you take the time to read CMC founder, Peter Cruddas’ biography or interview with us, you can see there is a huge passion for developing great products. He told us back in 2018;

One of our top priorities at the moment is to improve the user experience for our customers.

Before writing this review, I also got the chance to talk to Alister Sneddon, the Head of Product, and it’s quite clear that he too has a passion for the app and has lots of plans to add new features, markets and account types. Plus having previously worked with AJ Bell on their Dodl app, Moneyfarm and Interactive Investor, he has some fairly valuable insider knowledge on what makes an investing app work.

Therefore maybe it’s a good thing that instead of reskinning the CMC Markets platform they have started from scratch so they are not encumbered by legacy software and interdepartmental squabbles and can build the app the way they want to.

So, if you want a feature added, sign up to their community through the app and tell them what you want.  You never know. You could have a hand in creating the investing app you always wanted where you can also deal for free…