Interactive Investor Review

Interactive Investor is a good choice for investors who desire research reports and in-house recommendations for funds. Costs struggle to remain competitive for fund traders and active share dealers.

Top Takeaways for 2020

After reviewing Interactive Investor, here are our top findings:

• Founded in 1995, Interactive Investor (ii) has £36 billion in assets under administration and over 300,000 customers. Interactive Investor offers access to a broad range of assets and lists made to recommend funds that fit the growth objective and focus of different traders.
• Interactive Investor's costs can be cost-efficient for frequent traders who require solid research, screening tools, and technical insights. That said, there are cheaper options for funds traders and less frequent stock traders, especially if you do not require a ISA/SIPP account.
• Compared to trading tools leaders Saxo Markets and Interactive Brokers, the Interactive Investor platform and mobile app left us unimpressed.

Overall Summary

Commissions & Fees

Unique in the UK market, Interactive Investor uses a Netflix-like monthly flat-fee pricing model. Although Interactive Investor doesn’t charge any custody fees, pricing is average for share traders and below average for fund traders. That said, when considering commissions, traders must also take trading tools and research into account. Traders only placing 1 – 2 trades a month might find discount brokers like DEGIRO and FinecoBank more fitting. In contrast, traders who require more research might deem Interactive Investor worth the costs.

Depending on which Service Plan you choose, your cost for UK shares and ETF trades varies. The three Service Plans are Investor (£9.99 per month; £7.99 per trade), Funds Fan (£13.99 per month; £3.99 per fund trade, £7.99 per share trade), and Super Investor (£19.99 per month; £3.99 per trade). There is no charge for account inactivity. U.S. shares cost £7.99 per trade on the Investor and Funds Fan plans, and £4.99 on the Super Investor Plan. The Investor Plan comes with one free trade per month, while the Funds Fan and Super Investor plans come with two free trades per month. Interactive Investor also offers $0 commissions for regular investing, which allows you to invest as little as £25 per month into a designated share, ETF, or investment trust. You can have up to 25 "regular monthly investments", all of which charge $0 in commissions. Regular investing can be an effective way to increase your size in a position without paying commissions.

Market Data: By default, customers receive free delayed market data for available exchanges. To access real-time streaming market data, customers must subscribe to Quotestream for £20 per month.

Scenario pricing: When calculating annual share dealing costs, trading frequency and account balance are the two most important factors to consider. Assuming a £30,000 portfolio in a traditional, taxable share dealing account, here are four scenarios of how much Interactive Investor would cost based on trade frequency:

• 5 deals per year = £119.8 (Investor Plan = 1 free trade per month + £119.8 in monthly plan fees)
• 12 deals per year = £119.8 (Investor Plan = 1 free trade per month + £119.8 in monthly plan fees)
• 36 deals per year = £287.76 (Super Investor Plan = 2 free trades per month + £3.99 per trade + £239.88 in monthly plan fees)
• 120 deals per year = £622.92 (Super Investor Plan = 2 free trades per month + £3.99 per trade + £239.88 in monthly plan fees)
• 3 fund deals per year = £119.8 (Investor Plan = 1 free trade per month + £119.8 in monthly plan fees)

Platforms & Tools

While the fundamental research Interactive Investor offers is fantastic, technical research is a hit or miss. Unlike industry leaders Saxo Markets and Interactive Brokers, Interactive Investor does not provide a standalone trading platform. Instead, the website is the platform.

Given the lack of a decent charting tool and customizable trading tools advanced traders desire, Interactive Investor will satisfy most casual investors but leave seasoned traders disappointed.

Charting: With charting, Interactive Investor offers the bare-bones basics. Charts come straight from Morningstar, known for its vast array of fundamental research, not its technical analysis. No drawing tools are available, and only eleven technical indicators can be accessed.

Charts aside, Interactive Investor does provide automated technical analysis with Trading Central (Recognia), which is exceptional. Also, basic stock price alerts can be set. See the Research section below for more details on Trading Central.

Mobile Trading: Interactive Investor's mobile app is efficient and straightforward but has room for improvement. The app allows you to place trades, access watchlists, view charts on various time frames, and read current news. While this is nice, the app could be better if more research and fundamental data were integrated from the website and charting functionality.

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Research

Interactive Investor utilizes Morningstar for most of its fundamental research, and Trading Central for technical insights. Comprehensive research is available for shares, funds, investment trusts, and ETFs, with most assets having PDF reports. Overall, the research tools Interactive Investor offers are exceptional. In addition to fundamental research, Interactive Investor features a ton of articles and 15 educational videos. Articles discuss individual shares and funds and how the market will be affected by different events. Video content varies, but it is a cool way to stay updated on financial subjects while commuting to the office.

Standard stock quote screens contain the following research tabs: chart, prices, performance, rations, financials, news, owners, and insiders. Here are some highlights:

Automated Technical Analysis (Technical Insights): Traders who often utilize technical analysis will love Interactive Investor's Technical Insights. Technical Insights, powered by Trading Central, analyze chart patterns to display potential bullish and bearish trading signals.

Quickrank Tool: The Quickrank Tool brings full screening capabilities for shares, funds, investment trusts, and ETFs. Traders can quickly sort results by sectors and industries. Additionally, Interactive Investor offers a screener specifically for stocks that focuses on filtering stocks by data such as market cap and dividend yield.

Misc. Tools: Indice heat maps, risers and fallers, and market news are all available under the broader research tab. Morningstar powers the data for these tools, while a mix of third-party and in-house writers contribute news articles. Navigating to some of the news is a chore, but the content quality is exceptional. Discussion is also available on each stock, allowing traders to post their thoughts.

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Offering of Investments

Interactive Investor enables clients to trade shares, ETFs, trusts, funds, and more. SIPP and ISA accounts are also available in addition to share dealing accounts. Interactive Investor also offers four ready-made portfolios, each containing a growth or income strategy. Each portfolio is made of seven to eight funds and trusts and can help investors diversify their holdings.

International trading: 17 different international exchanges are available for Interactive Investor customers to trade on, including exchanges in North America, Europe, and Asia.

Super 60 Investments: Interactive Investor also offers ii Super 60 Investments and quick start funds. Super 60 Investments are a wide range of 60 active and passive funds, investment trusts, and ETFs recommended by experts from the Interactive Investor team. Each investment comes with a rationale as to why it was selected and an investment strategy.

Quick start funds: Interactive Investor offers three pre-made Vanguard portfolios that cost between 0.26% - 0.28% to invest in. These investments are a low-cost way for traders to get exposure to a broader range of assets recommended by professionals. Interactive Investor also offers three pre-made BMO portfolios that are inexpensive, for a total of six quick start funds.

Ethical investments: Interactive Investor offers 140 total ethical investments to help investors invest in socially responsible stocks, funds, trusts, and ETFs. Each ethical investment is given a label to denote the ethical focus of the asset. Of those 140 investments, Interactive Investor picked 40 for its ii ACE 40 list. The investments in this list are those Interactive Investor believes to be the best-in-class funds, investment trusts, and ETFs.

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Education

Interactive Investor has a sufficient education section, containing several articles and videos on how to get started trading, as well as ongoing articles discussing trading tips and ideas. My only complaint with the educational content is that you cannot access it once you log in to your account.

Final Thoughts

Interactive Investor highlights include fundamental research for stocks, funds, investment trusts, and ETFs, alongside exceptional automated technical analysis. Drawbacks center mostly around the lack of a rich charting platform and commissions and fees.

About Interactive Investor

Founded in 1994, Interactive Investor (ii) acquired TD Waterhouse in October 2016. In October 2018, Interactive Investor announced it was acquiring Alliance Trust Savings; the deal closed in July 2019. Today, with £36 billion of assets under administration, 300,000 customers, and more than one million users, Interactive Investor is one of the largest retail investment platforms in the UK.