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Interactive Investor launches new managed Isa – how does it compare?
The new stocks and shares Isa is aimed at hands-off investors
Investment platform Interactive Investor has launched a new type of stocks and shares Isa, which lets the platform pick investments for you.
The managed Isa is a middle ground between a ‘do-it-yourself’ stocks and shares Isa, where you choose what to invest in yourself, and a financial adviser who picks your investments based on detailed conversations about you and your goals.
You can invest up to £20,000 tax-free each year to invest across all Isas, including managed options.
Here, Which? takes a look at how the managed Isa works and how it fares against other options on the market.
Please note: the content contained in this article is for information purposes only and does not constitute financial or investment advice.
How does the Interactive Investor managed Isa work?
If you sign up to the Interactive Investor managed Isa, you’d need to fill out a questionnaire that asks how much you have to invest, what your goals are and your appetite for risk.
The platform would then match you to one of 10 portfolios in two styles and five levels of risk.
The two styles to choose from are index and sustainable. The index style invests primarily in passively managed funds and aims to not make frequent changes to investments. The sustainable style also invests in passive funds, while also seeking funds that integrate Environmental, Social and Governance (ESG) selection criteria into their choices.
You’d need a £250 initial lump sum to start investing, or you could set up a £50 regular monthly investment. After that, there's no minimum investment period, although they're designed for the long-term (five years or more) to get the most reliable returns.
Once invested, the portfolio is actively managed, which means someone is monitoring and buying or selling investments to keep the portfolio balanced and in line with the risk level you signed up for.
- Find out more: what is a stocks and shares Isa?
How much does the Interactive Investor managed Isa cost?
If you picked the index style, you’d pay 0.19% in fund management fees compared with 0.28% for the sustainable style.
On top of this, investors pay one of two fixed-fee charges – £4.99 a month if you have less than £50,000 invested and £11.99 a month if you have £50,000 or more.
If you already have an Interactive Investor stocks and shares Isa, the managed Isa would be covered by the fees you currently pay. Conversely, if you sign up to the managed Isa and later decided to choose some of your own investments alongside it that would be included under the same flat fee.
- Find out more: compare investment platform fees and charges.
How does it compare?
Interactive Investor is not the only brand to offer a managed stocks and shares Isa.
We've calculated the fees for both styles of portfolio, alongside other providers offering actively managed portfolios in a stocks and shares Isa, for a range of amounts invested. The links take you through to our reviews.
| Platform | £5,000 | £10,000 | £25,000 | £50,000 | £100,000 | £250,000 | £500,000 |
|---|---|---|---|---|---|---|---|
| Interactive Investor index style | £69 | £79 | £107 | £239 | £334 | £619 | £1,094 |
| Interactive Investor sustainable style | £74 | £88 | £130 | £284 | £424 | £844 | £1,544 |
| InvestEngine | £24 | £47 | £118 | £235 | £470 | £1,175 | £2,350 |
| Moneyfarm | £53 | £105 | £253 | £490 | £940 | £2,065 | £3,815 |
| Nutmeg | £49 | £98 | £245 | £490 | £980 | £1,850 | £3,330 |
| Vanguard | £30 | £60 | £150 | £300 | £600 | £1,500 | £2,625 |
| Wealthify | £38 | £76 | £190 | £380 | £760 | £1,900 | £3,800 |
Based on active management portfolios and includes account, fund and management fees. Correct as of 22 May 2024.
For smaller investment pots – worth £10,000 and less – the flat fee structure will work out to be the most expensive. Competitors who charge a fee as a percentage of the total investments will work out as better value for these investors.
But, for investors with more than this, the Interactive Investor Isa will be either cheapest or among the cheapest in fees.
As it’s a new service, we can’t yet know how the investments themselves perform against competitors.
Some investment platforms also offer ready-made portfolios which are similarly aimed at beginners, or those who don't want to have to work at balancing their investment portfolios, but they're not actively managed like the products above so they weren't included in the comparison.
Is a managed Isa right for you?
Before you get started with any kind of investment Isa, it's important to check it's the right thing for you and your finances. For example, if you're low on rainy day savings or have any kind of high interest debt, you shouldn't start investing until your debt is cleared and you have enough easy-access savings to cover an emergency. You can read more about getting ready to invest in our beginner's guide to investing.
If you're ready to start investing but don’t quite have the confidence to choose your investments, a managed Isa is worth considering. In this situation, you could also benefit from the help of a financial adviser, although financial advice costs can be high.
If you’re already comfortable choosing what to invest in, a managed Isa might not be the right product for you. Instead, a ‘do-it-yourself’ stocks and shares Isa, or general investment account, gives you a choice between a range of funds, stocks and other assets.
The investment platforms that offer these products differ in a lot of ways – some are aimed at beginners and provide just a few investments, while others aim to give you as close to every option available as they can. Some platforms make customer service a high priority and offer different channels to get in touch, while others lag behind.
To help you find the right platform for you, we surveyed 4,136 investors to find the best investment platforms.
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