Revolut welcomes ETFs to major fintech

Fintech giant Revolut announced a partnership with Berlin-based Upvest to offer app users the ability to trade 158 ETFs in just the latest sign that digital distribution is driving the uptake of retail packaging in Europe.

Customers of Revolut Securities Europe UAB will be able to trade fractional ETFs at volumes as low as €1, with the offer available to all users in the European Economic Area (EEA).

The ‘Shares’ segment of the fintech app will allow retail investors to make either one, three, five or 10 free trades per month, depending on their Revolut membership plan, with additional trades carrying a fee starting at 0.25%. The app also has an annual deposit fee of 0.12%.

The move marks the latest venture into ETFs for Revolut chairman and former Aberdeen Asset Management boss Martin Gilbert.

After telling the participants about ETF flows ETF Ecosystem Unwrapped 2021 event not moving into ETFs was the biggest regret of his time at the helm of abrdn. Shortly thereafter, venture investor AssetCo, which Gilbert heads, bought a majority stake in thematic ETF issuer Rize ETF.

As a leading disruptor in banking, Revolut’s new ETF platform is an important moment. Their app offers trading – as opposed to wealth management or other investment opportunities – that could be a model for client flexibility and fee collection others may choose to follow.

The fact that they chose to launch the offering with ETFs, with plans to trade individual stocks, is both a vote of confidence for the wrapper and its recognition of cutting-edge fintech players. It will also bring new retail awareness of ETFs in Europe, which currently lags far behind the US.

Revolut’s move is just the latest in the digital distribution story for ETFs so far this year. ETF savings plans have taken center stage, with the likes of Bux, Scalable Capital and Trade Republic all expanding the reach of their offerings, while more established names such as Vanguard, M&G Wealth and Hargreaves Lansdown have all increased access to ETFs via new platforms and Products.

Fintech’s role in retail ETF distribution is a story that deserves closer attention. JP Morgan’s challenger bank Chase UK has started incorporating Nutmeg – the robo-advisor it bought in 2021 – into the “Save and Invest” section of its app, giving customers access to the firm’s ETF-based model portfolios. Movements like this and Revoluts may be just the infancy of a long relationship.

Own interests are difficult to move

In less optimistic news for potential retail investors in ETFs, the European Commission’s “value for money” rules appear to scale back its earlier proposal for a blanket ban on inducements – or retrocession fees – for asset managers and banks.

Instead, the draft rule proposes a ban that only includes inducements to sell products without advice, meaning advisers can still earn a commission when they sell certain products to their clients, even if the products with the inducement attached are not the most appropriate for their clients. need.

Earlier, European Financial Services Commissioner Mairead McGuiness said incentives were slowing the uptake of low-cost products such as ETFs.

Last month, McGuiness softened his stance and called for a ban on “execution-only transactions” during a speech in Stockholm.

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