The firm was founded in 2015 by Adam Dodds and has regular crowd-funding rounds on Crowdcube.
It has an FCA licence and joined the London Stock Exchange so as to be able to process its own orders in bulk.
My early experiences with the firm were not great.
I signed up to the waitlist a long time ago and persuaded enough of my friends and colleagues to do the same (using my referral code) that I made it almost to the front of the queue.
But when the beta test arrived, there was no desktop site, ((I’m not a massive fan of trading from phones )) no Android app and the iOS app needed a recent version to work.
My phone was too old even to allow me to sign up for the Android waitlist.
But eventually, I inherited a new phone and was gifted an Andriod tablet – and the Freetrade Android app was released.
Suddenly, trading from an Android platform looked plausible, if not desirable.
Trading costs
Trades on the main UK platforms run from £12 at Hargreaves Lansdown, down to £5 at iWeb and £6 at X-O.
I have also tried out DeGiro, where most trades work out at less than £2, but their European insurance scheme meant that I never put more than £20K into the account.
Some platforms have discounts for frequent traders (usually cheap trades in the month following a busy month, which is not as useful as it sounds).
Others allow cheap trades if you bundle your purchase with everyone else, in a large trade done once per day.
Which is essentially the approach that Freetrade began with.
Freetrade charged nothing for a 4pm bulk trade, and just £1 if you want your own instant trade.
After a while, the £1 charge was dropped and instant trades became free.
They also charge £3 per month for an ISA.
Foreign trades (largely US stocks plus some Asian companies listed as ADRs in New York) have an FX surcharge of 0.45% over the spot rate.
So more like a dozen asset classes than 44, but still enough to build a trend-following portfolio.
Trading 212
Freetrade’s big rival in the UK is Trading 212, who are from Bulgaria but FCA-authorised.
They now style themselves as a London-based fintech firm.
T212 initially targeted CFD traders with mobile ads, but they also offer (free) ISAs and taxable share accounts.
I never saw the ads and eventually found the firm via Reddit, where their supporters say they are shouted out by Freetrade cheerleaders who invested in the latter firm’s crowdfunding rounds.
We reviewed Trading 212 in March 2020. (( Which seems so long ago now ))
The Trading 212 website has a handy table comparing the features of the service against its rivals.
Key for us are:
more stocks than Freetrade
no FX fees
limit orders and stop losses
a website application (not just a phone app)
a free ISA
The obvious application for me was to trade US stocks with them.
Pies
Since my review, T212 have added a new feature called Pies, which amounts to designing your own portfolio to which you can add through a regular monthly subscription.
This feature is underpinned by the use of fractional shares (which Freetrade also supports).
Pies have two goals:
To have a diversified portfolio and easily maintain diversification balance in the long term, as markets move up and down.
To be able to make contributions to your portfolio without having to make complex calculations in order to allocate the right amount of money to each company/ETF you own.
In other words, they act like a home-made fund with a very low minimum contribution, which is great for those with smaller portfolios.
Pies can hold both stocks and ETFs, up to a maximum of 100 securities.
And you can have multiple pies, though you can’t nest one pie within another (yet).
You can also manually contribute funds to a pie at any time, and top-ups can by according to your original splits, or self-balancing (more funds added to underweight instruments.
I think this is a very useful feature.
Freetrade Plus
A question most people ask is how do these platforms make their money?
The most common answer up to now has been that T212 cross-sell to their more profitable CFD business, but Freetrade’s only source of income was their £36 a year ISA account.
In recent months, Freetrade has announced a Plus account which will cost £120 pa, and recent statements are clarifying how they will entice people to use it.
Features of the Plus account include:
Limit orders, stop losses, and a much longer list of stocks, with specially curated collections to help you discover them easier [sic].
With collections such as ‘Fighting Covid-19’ and ‘Fighting climate change’ you can find the companies involved in the most important issues affecting the planet, while others like ‘Cloud computing’ allow you to uncover stocks that meet your investment needs.
The ISA fee is included in the Plus fee and Plus customers also get priority customer support.
Last month, Freetrade explained how the stocks lists will differ between the Basic account (now renamed as a GIA) and Plus.
For plus:
Our long-term vision is to make all listed companies globally, from Hong Kong to Latin America, available in Plus. Starting this week, we will begin to add new UK and US stocks available exclusively to Plus members.
Which means:
FTSE All-Share
FTSE AIM All-Share
S&P SmallCap 600
Plus any other highly requested small and micro-cap stocks not included in these indices
The “Free Universe” will be:
FTSE 350
FTSE AIM 100
MSCI US Prime Market (the 750 largest companies listed on major US exchanges)
IPOs, SPACs, and other highly-requested large cap companies
More significantly for current users:
A small number – specifically 84 London-listed and 52 New York-listed stocks – currently available to all Freetrade users will become part of the Plus universe.
If you hold one of those stocks and decide not to become a Plus member, you will be able to continue holding or sell the stock, but you will no longer be able to buy more of this stock.
I had a quick look at the list movers and as expected, it’s:
Plus Account = Free ETFs, plus all the other UK ETFs that Freetrade offer
This meant that 28 ETFs would be disappearing from the Free account.
If you hold one of these ETFs and decide not to become a Plus member, you will be able to continue holding or sell the product, but you will no longer be able to buy more
shares.
We’re going to make sure that everyone holding one of these ETFs has plenty of early warning before they are moved to Plus.
The announcement led to a row on the Freetrade bulletin board, largely around an Invesco ETF that tracks the Nasdaq index – the replacement ETF costs around £500 a share.
I thought that the use of fractional shares would solve that problem, but apparently, that feature is only available on US stocks.
In any case, a few days later, Freetrade announced a new split:
Free Account = ETFs from iShares and Vanguard and Invesco
Plus Account = Free ETFs, plus all the other UK ETFs that Freetrade offer
This is not a big change – as far as I can see, the Nasdaq ETF was the only pre-existing one from Invesco.
A quick tour
Let’s start by looking at the ETFs that are leaving.
The main areas of concern (which I have emboldened) are:
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.OkPrivacy policy
