Socially minded? Worried about how your money is being invested? Then this platform is for you. Freshly minted in October 2020, The Big Exchange only provides access to investments that have a positive impact on the world. It gives ethically minded investors the opportunity to make their money work harder for them as well as the planet and the people on it.
The idea for the Big Exchange came from the Big Issue group, co-founder and The Big Exchange’s largest shareholder. They’re separate companies with separate boards but a shared mission, which means that the Big Issue holds the Big Exchange to account and makes sure it sticks to its mission and objectives.
Nuts and bolts
Like other D2C platforms, the Big Exchange charges a fee (0.25%) for hosting and administering your investments. These are competitive and roughly in line with what other D2C platforms charge. There are no fund trading fees or other hidden charges apart from the cost of the actual funds (the ongoing charges for the funds can vary substantially but more on that later).
In terms of accounts, it offers ISAs, junior ISAs and general investment accounts. A pension is in the pipeline and is expected in the first quarter of 2021. Investors can open an account with a minimum investment of just £25pm or a £100 lumpsum. They can choose from three risk-rated portfolios (or bundles as it calls them) or create their own portfolio from the list of funds.
Setting up an account and making my first investment was nice and easy and took about five minutes in all. Everything was cleanly laid out and explained and the whole thing was painless. I wasn’t asked to send in any paperwork, but when I logged in the second time, I was asked to send digital copies of my ID, bank account and utility bill to a secure email address. There’s no nagging or time pressure to do this, but you can’t withdraw your money until you do.
At the time of launch, the Big Exchange has just 36 funds by 10 fund company partners (Alliance Bernstein, Aberdeen Standard Investments, Liontrust, Pictet, Quilter, Columbia Threadneedle, Tortoise, UBAM and WHEB). It’s also in the process of onboarding another 10 funds from two more, Nordea and Stewart.
Whereas index-trackers and ETFs have become increasingly popular on other D2C platforms, unusually the Big Exchange funds are all actively managed. ESG funds aren’t immune to the passive trend, but to really bear down on the ESG issues that matter to investors, funds need to be actively managed. For example, voting at shareholder meetings is one way that investors and the fund manager can influence how businesses affect the environment and the communities they operate in.
The jewel in the Big Exchange’s crown is the fund vetting and selection process. 3D Investing worked with The Big Exchange to build a unique impact assessment methodology based on the United Nations’ Sustainable Development Goals (see here), while Square Mile Investment Consulting and Research has designed the allocation framework and selects the funds for risk-rated fund bundles (not all are included in the bundles).
So what the Big Exchange lacks in numbers of funds, it makes up for with bucket loads of fund and impact information. As well as providing the usual factsheet and key investor information document (KIID), each fund is mapped to its benchmarked for its positive impact and given a gold, silver or bronze medal. Potential controversies are clearly set out too (see below).
The Big Exchange does a nice job of exploring risk and the relationship between risk and returns. To make it easier for investors to choose, it has three different bundles (or portfolios) of funds that are categorised as Cautious, Balanced and Adventurous. Investors can review the bundle, the medals and the underlying funds in each bundle. It also allows investors to put together their own bundle from the list of 36 funds.
Overall, this is a nice little platform that gives ethically minded investors the chance to do good with their money. A nice touch is the Social Passport. It illustrates how an investment has had an impact, and in the future will also provide details of ethical services and products. So far nothing is listed, but this is an area that is expected to grow with time.
The team has struck the right balance on content and the level of information it gives investors — it’s neither too little nor too much and the impact insight for each fund is delivered in a clear, concise and easy-to-digest way. However, tools, calculators and other general learning resources for investors are basic and thin on the ground, and is another area that the Big Exchange should beef up.
The site has only just launched so I suspect there will be more in the pipeline — The Big Exchange team is small and the site has been put together with a lot of goodwill, volunteer help, and support from the industry (mainly its fund and technology partners).
Getting listed isn’t easy and the Big Exchange turns away many more funds than it lists on the site. It’s worth noting, however, that some of the funds are quite niche and esoteric, so the fees are higher than those of mainstream funds. Fees can erode returns so it’s important that investors are able to monitor and evaluate how their bundles are performing… as long as the Big Exchange is as transparent and informative on returns and benchmarks as it is on positive impact, this shouldn’t be a Big Issue.
See how The Big Exchange weighs up against other DIY platforms on our platform calculator.