Summary of IGIndex Review: The attractions for IG are considerable. A recent price cut has seen their share dealing fees become very reasonable, especially relative to other companies their size. As a profitable, listed company counter-party risk is virtually negligible compared to the much smaller P2P companies. They offer an extremely wide range of products, from ISA, share dealing, options, CFD and spread-betting accounts. Whilst there is plentiful help available and its own community, IGIndex is very much an execution-only site and offers no advice or guidance on trading. The exception to this is its new Portfolios site, which purports to offer a managed ETF service. Caution must be taken, as with some products it is possible to lose multiple times your initial stake if the markets go against you.
Here is how IGIndex compares with sites where you can buy financial instruments. Note that XIRR in these cases are not directly comparable to each other. This is due to different strategies being used on different sites.
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What is IGIndex?
IGIndex is a trading name of IG Group, listed on the London Stock Exchange with the ticker IGG. The name derived from its beginnings in 1974, when it was called Investors Gold Index, which allowed investors to trade the gold price rather than purchase the metal itself. Since the turn of the millennium, the group rapidly expanded into other areas as the Internet facilitated instant trading. Many different firms were acquired and previous products included both fixed-odds and spread betting on sport markets.
More recent tighter regulation in the UK has seen IG quit some markets altogether. Sports betting was scrapped, and in 2017 the firm stopped offering leveraged binary betting and concentrated on spread betting, retail trading and CFDs. Over the years they have been immensely successful and one of the largest providers in the UK.
How is my money protected?
Protection of funds is strong at IG. Client monies are held in segregated accounts, and cannot be used for other purposes. Shares that you purchase are also segregated in separate accounts and are unencumbered; that is to say no other party has a charge over them. In the case of business failure, it would be most likely the case that all assets would be liquidated and funds returned. This is after administrator costs. IG benefits from FSCS protection up to £85,000 which in theory should cover these costs, although this may not for those with larger accounts.
Is IGIndex profitable?
The parent company IG Group is listed in the FTSE250, so it is possible for anyone to look at their accounts. Their figures are pleasing. The company is extremely profitable, earning net profits of £240.4m in 2020. On the balance sheet side of things, this also gets a green light: the group operates with a very large net cash position of almost £500m.
IGIndex Review: Signing Up
Signing up for an IG account is only a little bit more complicated than any other account. You’ll need to provide your personal details as well as give details on your experience and funding levels. For an ISA/SIPP account you’ll also need your National Insurance number. Verification can be completed automatically and gives you access to the basic demo account, share dealing and ISAs. Each product has its own separate account and trades made are contained within them. So if you want a share in your ISA or SIPP, you need to buy it with that account. You cannot buy it in another account and transfer it in.
IG also has accounts for more advanced users – namely CFD and spread betting accounts. These are not displayed by default, but can be opened if you successfully complete a product knowledge questionnaire.
IG also supports the MetaTrader 4 platform. This is a common platform which allows more detailed analysis and can automate trades based on rules. This option is available with only the spreadbet and CFD accounts.
What are IGIndex fees?
Fees are a major part of deciding where to trade. This area can be tricky, with several different chargeable areas depending on the product selected. The proliferation of cheap trading accounts such as Freetrade and Trading212 has put some pressure on incumbents such as IG. For share dealing, fees are relatively cheap at £3 a UK share (subject to making 3+ trades in the previous month). It is even better for US shares as the commission fee drops to zero if you make 3 trades in the previous month.
One more obscure fee is the custody fee. This charges you £24 a quarter, although you will be exempt if you trade three times or hold at least £15,000 in the Smart Portfolio accounts.
Fees for CFDs and spread bets are more complex. You can view the latest charging schedule here.
IGIndex Review: Pros
The IG site is trusted and proven. As a counter-party your money is about as safe as it is in a bank, thanks to the FSCS scheme. The company is profitable and the financial status of it is currently very secure.
There is a vast range of products to choose from – spreadbet, CFD, options, and share dealing accounts. Within this, a wide array of shares – both UK and international are covered, as well as options and also more exotic products such as crpytocurrencies.
Fees are not the cheapest on the market but they are competitive enough, especially if you trade frequently.
The platform also comes with a lot of free content such as tutorials, software and webinars. There is also an online community where users can chat.
IGIndex Review: Cons
The platform has a steep learning curve. There is no ‘beginners mode’ where everything is pointed out to you. You are basically on your own with the charts and data, and you’ll need to look elsewhere for analysis.
Some products need more care, as you can lose more than your initial stake, and often very quickly. IG currently report that 76% of traders using CFDs lose money. A fair percentage of these are likely to be new traders.
The account is unsuitable for irregular traders as the inactivity fees are almost £100 a year. This can be mitigated by holding other products, but the £15,000 minimum requirement is fairly substantial. The £3 share dealing fee also rules out those who want to deal in very low volumes.
Shares are held in a nominee account and not directly by the user. Generally these do not allow access to AGMs, or quality for shareholder benefits such as discounts.
There is an app, but this is not as slick as many of the app-based interfaces out there such as Freetrade/Trading212/EToro.
Conclusion of IGIndex Review: A profitable, well-regulated operation, IGIndex is certainly worthy of consideration of holding a larger portfolio. There are a wide range of products here which appeal to advanced users.
Disclaimer: This IGIndex review represents my own opinions and should not be substituted for investment advice. Please research before you invest with any firm. Any advertised returns are not guaranteed, and you could lose more money than you deposit.