Wednesday 23 August 2017

Price-slashing broker to offer Irish investors free funds access

Degiro now has 150,000 customers across 18 European countries
Degiro now has 150,000 customers across 18 European countries

Charlie Weston Personal Finance Editor

A DUTCH online broker is set to offer Irish investors cut-price share dealing services and free access to some 800 low-cost funds in an effort to build up market share here.

Degiro, one of Europe's fastest growing brokers, has made the move to allow free investing in popular funds in response to RaboDirect ending its investment services in Ireland.

The broker will offer free trading in investment funds from March. Funds will include those currently offered by RaboDirect to Irish clients.

At the moment Degiro offers free trading in around 700 exchange-traded funds (ETFs).

The move means customers of RaboDirect's funds platform, which consists of some 50 funds, will be able to continue investing in these funds with Degiro at a lower charge.

"Investors in Ireland have been paying nonsense fees for too long," Degiro co-founder, Gijs Nagel, said in Dublin this week. "By making this statement we want to show that paying too much for such services is unnecessary."

He said Ireland is one of the most expensive countries in Europe when it comes to online investing. Mr Nagel said his product has fees that are 90pc lower than competitors' fees.

Degiro says it will not charge customers an entry or exit fee on the funds.

RaboDirect typically charged a 0.75pc entry fee and 0.75pc exit fee.

Mr Nagel said the only fee customers will face is the annual management charge imposed by the fund, which is typically around 1pc.

Customers also will not be charged for having an account with Degiro. The broker is hoping that once customers join the platform they will then consider opening a trading account, through which Degiro will earn fees.

Launched here in 2015, Degiro has been offering a low-cost alternative to existing players. It now has built up a base of some 6,000 customers in Ireland.

Data provided by Degiro shows that trading €1,000 worth of Bank of Ireland shares will cost an investor €2.40, compared with as much as €100 with established stockbrokers here.

Founded in 2008, Degiro now has 150,000 customers across 18 European countries.

The broker is not regulated here by the Central Bank, but instead uses EU 'passporting' rules to operate across Europe.

It operates under the regulatory capital supervision of the Dutch central bank and under the general regulatory regime of the Netherlands authority for financial markets.

Degiro has 160 employees, and reported net profit of €1.5m in the third quarter of 2016.

Degiro's price-smashing entry into the British market has proved popular.

It claims to offer to private investors the prices that have until now been available only to big institutions.

So far it has been successful. Its Dutch operation launched in 2008 offering services to institutions.

Just 18 months ago it rolled the service out to private Dutch investors. It now says it accounts for a huge chunk of all private investor trades in Holland, and it has particular appeal for active traders.

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