Wombat Invest Review

Overview

Wombat is a cutting-edge investment platform based in the United Kingdom, designed to simplify and democratize the world of investing. Founded in 2018 by Kane Harrison, Wombat was created with the vision of making investing accessible to everyone, regardless of their financial background or expertise.

The platform distinguishes itself by offering a curated selection of investments, striking a balance between platforms with very limited fund options based on risk appetite (the so-called “robo-advisors”) and those that provide access to thousands of stocks. All of its funds are themed using simple language so users know exactly what they’re investing in.

It also has some nice features for those looking to build up their portfolios over time like Auto Invest and Round Ups (Standard accounts) and fractional shares (GIAs only).

It does all of this with some of the lowest fees in the industry.

Account Options

Wombat offers four types of accounts:

Standard GIA: A GIA is a “general investment account”. It gives you full access to the platform, but any profit or dividends may be subject to tax. It charges the standard Wombat fees (see the Costs section below).

The Instant GIA: This account lets you trade instantly within market hours (usually trades on Wombat have a delay) and it doesn’t charge an account fee. It also gives you a small amount of cashback each time you invest in a stock (0.2%) – though as you pay a 0.65% FX fee you can’t just trade yourself into profit automatically.

However, it is a really restrictive account because you can only invest in US stocks through it. So you miss out on UK & European shares as well as the themed funds Wombat offers. The Auto Invest and Round Ups features are also not available.

Standard Stocks and Shares ISA: This is a tax-advantaged investment account available to residents in the United Kingdom. Any gains or income generated within the ISA are exempt from capital gains tax and income tax. This makes it a powerful tool for long-term savings and investment, helping individuals grow their wealth without the burden of taxation. ISA contributions are subject to an annual limit of £20,000 set by the government, and unused allowances cannot be carried forward.

Standard Junior ISA: Parents or guardians can contribute up to £9,000 annually on behalf of their child. The child then gets control of the funds at age 18, with all returns and gains being tax-free. It’s designed to help children build financial assets for their future.

Please note, tax treatment depends on individual circumstances and may be subject to change in future

Note: Only the instant account will execute trades right away – all other accounts have delayed trading with orders normally going ahead at 3 pm on weekdays. This lets Wombat batch up all its orders into one and helps reduce costs. However, it does mean purchase price can vary by the time your order actually goes through.

Costs

[.custom-color]Wombat is part of the wave of digital investing companies offering rock-bottom fees.[.custom-color]

Their “Standard” accounts all charge the same fees. Let’s lay them out before comparing them to competitors:

Subscription Fees: £1 a month is charged as standard. This is taken from any cash balance you have or, if necessary, a small amount of your assets are sold to cover it.

Account Fees: Womnat charges 0.1% of your portfolio value yearly (billed monthly).

FX Fees: A 0.75% fee is charged when you buy US or European Shares.

Fund Fees: The funds you buy through Wombat are actually run by reputable fund managers like Blackrock and Vanguard. These charge their own fees between 0.07 and 0.75%.

That’s it! Trades and deposits are free – which we think makes things really simple and gives users peace of mind.

Remember, your capital is at risk when you invest.

Vs. Competitors

So Wombat’s fees are really competitive. Whether it beats the newer platforms like Freetrade really depends on your account size and how often you trade non-UK shares. What’s clear though is that Wombat beats the older brokers like HL and AJ Bell on fees by a considerable margin.

InvestEngine beats everyone but it does only offer ETFs.

Instant Account Fees

This has no subscription or platform fees and the FX fee is marginally lower at 0.65%. However, as mentioned above it has much fewer features and is just restricted to US stocks.

Range of Investments

[.custom-color]By design, Wombat has a small range of investments.[.custom-color]

There are two types of assets you can buy on Wombat:

Stocks and shares: A stock represents ownership in a publicly traded company, entitling the shareholder to a portion of the company’s assets and profits. We counted it up and, at the time of writing, there are 443 stocks available on Wombat Invest.

The general investment accounts allow you to trade “fractional” shares. These enable investors to buy and own a piece of a high-priced stock or ETF with a smaller amount of money, making it more accessible. For example, Chipotle currently trades for over $2,000 a share which can be prohibitive for smaller portfolios. Fortunately, Jeremy Hunt recently announced that fractional shares can soon be held in ISAs, clearing up some confusion.

ETFs: This stands for Exchange-Traded Funds. An ETF is like a bundle of different investments (like stocks, bonds, or commodities) that you can buy and sell on the stock market. Wombat gives each ETF a theme in simple language. This allows you to invest in trends that interest you without having to individually pick stocks. It is generally seen as a safer way for new investors to trade.

There are currently 32 ETFs listed on Wombat. Examples include The Green Machine (focusing on renewable energy companies) and The Techie (focusing on big tech companies).

Overall there isn’t a wide range of investments on offer. For example, Freetrade offers over 6,000 stocks and funds and Trading 212 has over 12,000. However, this is a deliberate choice by Wombat to strip back the number of investments to make the platform beginner-friendly.

The App

[.custom-color]Wombat has a wonderful app, though it is a bit basic.[.custom-color]

Let’s walk you through the key bits of the app:

Opening An Account: We tested opening an account and it was pretty painless. You will need to enter standard details like your name, address and National Insurance number. For an ISA you will also need to provide a pic of your passport or driving licence.

We set up a GIA, and once we entered our bank details we had to undergo an ID check. This was done automatically and took just under 20 seconds.

We were then notified that our £10 bonus would be credited within 2 working days.

(Note: There is a minimum value of £10 for any trade.)

The Home Tab: Gives a simple overview of your portfolio value and balances. Also lets you add money or turn on the “Round Ups” feature (explained below).

Portfolio Tab: Displays your current balance and portfolio as well as providing projections of potential future value. From here you can set up the “Auto Invest” feature (explained below).

Invest Tab: This is where all the action happens. Wombat displays a list of funds and stocks you can invest in. The funds all have simple names to describe the ETFs they represent. The layout is a bit bare for our tastes but could appeal to a complete novice. We do however like the “chilli” rating, which gives you a quick view of the risk/reward level of each ETF.

Once you tap on an asset you can see details about it including the assets that make it up (for funds), a description of the company and past performance. We would like to be able to get into a bit more detail here – for example, you can’t refine performance down to the past month – in fact, the minimum you can see is the last 6 months for Standard accounts. With Instant, you can also view daily and weekly performance data.

Buying a share is a really simple experience – see the last screenshot above.

Learning Hub Tab: This contains Wombat’s learning materials. The content is good but the articles are not arranged in the most logical way. It’s also all text-based without any videos. We think Wombat could do a better job here given it is pitching itself at novices.

Account Tab: This lets you make changes to your details etc.

Overall the app is nicely designed, but feels a bit empty compared to the likes of Lightyear. If you get easily overwhelmed by financial data this could actually be a plus, but we do feel Wombat has stripped things back a notch too far.

Other Features

There are another couple of useful features that we liked on Standard accounts:

Auto Invest: This lets you invest a set amount each month into a stock or ETF. It’s a good way to commit to investing.

Round Ups: When you link your bank account to the Wombat app, it rounds up each transaction to the nearest pound and saves the difference in your investment pot. For instance, if you purchase an item for £2.50, Wombat rounds this up to £3.00, and the 50p difference is set aside to be invested.

Capital at risk.

How Good Is Customer Service?

[.custom-color]Customer service is average.[.custom-color]

You can’t speak to a person over the phone – but this is now the standard for digital apps.

Instead, you can use email or webchat. We tested the latter and were initially triaged by a bot which couldn’t answer our question. However, we were then able to select “talk to a person” who was able to answer our question within 2 minutes. The customer service team are available until 10 pm each night (including weekends).

Is It Good For Beginners?

[.custom-color]Yes – Wombat’s whole app is geared towards beginners.[.custom-color]

It offers a user-friendly platform with a low entry threshold, requiring only £10 to start. The app simplifies investment choices with thematic ETFs and fractional shares, making it accessible for those new to investing. Additionally, features like Auto Invest and Round Ups help inculcate regular investment habits without overwhelming beginners.

Is Wombat Legit and Safe?

[.custom-color]It is highly regulated.[.custom-color]

Wombat Invest is authorized and regulated by the Financial Conduct Authority (FCA) in the UK. This compliance with regulatory standards is a crucial aspect of ensuring operational and financial integrity. It is also covered by the FSCS, which can protect your money up to £85,000 in the unlikely event that Wombat faces financial difficulties or fails.

However, the value of your investments can go up as well as down, so there’s always a chance you could get back less than you put in.

So In Conclusion, Is It A Good Investment App

We have no hesitation in recommending it as a good investment app – but only for those looking for a simple (and perhaps sometimes simplistic) set of options.