Best Commodity Trading Platforms 2023 – Forbes Advisor UK

There are various types of fees charged by commodity trading platforms:

This is a flat fee charged by the platform each time an investor buys or sells an investment. Some platforms charge no trading fee (often known as ‘zero commission’ platforms), while others typically charge between £5 to £10 per trade. More frequent traders may benefit from reduced trading fees.

Platforms typically charge a lower, or no, trading fee on (OEIC) funds than ETCs, ETFs and investment trusts.

This is an annual fee charged for holding investments on the platform. Some platforms charge no fee, others charge a flat fee and some charge a percentage, typically 0.25% to 0.45% of the value of the portfolio, often capped at a fixed amount per year for ETFs (and shares).

There are two categories of percentage-based platform fees:

  • Tiered fee: this is the most usual type of platform fee whereby different rates are charged on different ‘slices’ of the portfolio. For example, for a portfolio worth £300,000, a 0.45% fee might be charged on the first £250,000, then 0.25% on the next £50,000.
  • Non-tiered fee: a small number of platforms charge a non-tiered fee, whereby the same fee is charged across the whole portfolio. For example, a 0.2% fee might be charged on the whole £300,000 of a portfolio.
  • Foreign exchange fee

If investments are denominated in a currency other than pounds sterling, the majority of platforms charge a foreign exchange (or conversion) fee of around 0.5% to 1.5%. Some providers also charge a higher trading fee for non-UK investments.

A small number of providers allow investors to hold their funds in a foreign currency, which enables them to convert it once and use this ‘pot’ for buying and selling investments in the same currency (reducing the foreign exchange fee on subsequent trades.

Holding non-UK investments also carries exposure to foreign exchange risk. For example, if the pound strengthens against the dollar, US investments will be worth less in sterling (and vice versa).

Some platforms charge other fees, such as inactivity fees, withdrawal fees (for accounts held in a currency other than sterling) and higher fees for trading by telephone (rather than online).

Although not technically a fee, platforms also make money on the buy-sell spread on live-traded investments such as ETCs and ETFs. For example, an ETF might have a buy-sell spread of 110-113 pence. This means that investors would pay 113 pence to buy a share in the ETF and receive 110 pence to sell it. 

Some platforms offer more competitive buy-sell spreads than others, and less-traded investments, such as some investment trusts, may have wider spreads than ETFs and ETCs.

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