When I got my first iPhone several years ago I quickly decided that I wanted to own shares in Apple, the company that made it. But while it was clear to me that this could be the best company ever, my attempt at buying the shares failed because my broker didn’t deal in them. With the purchase of my next iPhone some years later I had another go at buying shares in Apple, which had tripled in price. While my broker did now deal in the stock, it was charging a staggering £80 to execute the trade.
Buying and selling foreign shares can be expensive, but it doesn’t need to be. UK investors are increasingly looking at foreign markets to diversify their portfolios and grasp new opportunities. Historically, the main barrier to this has been the limited market access and high trading costs offered by many brokers. So choosing the right broker is crucial. However, a lack of comparison tools online makes it incredibly hard.
As a result, this summer at Stockopedia we researched and built a database to investigate and model the costs of all the main execution only and advisory stock brokers in the UK. The results are quite enlightening and we hope are of great use to readers.
Three Key Questions
In summary, deciding which broker is best for you will depend on three questions:
1. Which markets are you looking to access?
Most of the big brokers offer access to the US and some European exchanges but often that’s where the opportunities end. Big emerging markets like Hong Kong and Singapore as well as well established markets like Australia, Japan and Canada are overlooked by brokers including Hargreaves Lansdown, IG, and Halifax. Other brokers may offer a list as long as your arm but charge outrageous commissions for the privilege. In our research, the highest commission for a single trade was an outrageous £200.
We found that the best coverage of markets was provided by AJ Bell Youinvest, DeGiro, Interactive Brokers and SaxoBank. They were the cheapest services to provide access to the above markets and more. If your broker is not offering you access to these markets, or offering them with minimum fees of £20 plus 1.5% foreign currency commission, then you could broaden your options and save money by switching.
