Platforms, Wrappers, Funds and Assets
There are multiple layers to investing these days, and in this short video, I explain the differences between platforms, wrappers, funds and assets and how they work together to form a cohesive portfolio:
Platforms, Wrappers, Assets and Funds
Here are the four main building blocks of any portfolio:
Platform: An administrative system, usually with online access, which enables the investors to hold different kinds of tax wrapper ‘under one roof.' Benefits include consolidated reports, easy trading and switching of funds, tax reporting and management and more.
Wrapper: An investment or pension product within which funds and assets are held. Examples include pensions, SIPPs, ISAs, offshore and onshore bonds , and general investment accounts.
Fund: A collective investment which itself will invest across many other funds or assets. Examples include Unit Trusts, Open-Ended Investment Companies (OEICs), Investment Trusts, tracker funds, Exchange Traded Funds (ETFs) and more.
Asset: The smallest building block of a portfolio. Examples include individual shares, bonds, gilts, gold, etc.
These days it is rare to see a portfolio which doesn't include all of these. Take me for example. I hold a SIPP and an ISA (wrappers), both held on the same platform. Each has funds within it, and within those are individual assets.
While it might seem like a complication, this layering brings flexibility. It can also add layers of costs, so it is important to ensure you are receiving value at each level in the hierarchy.
(By the way, this video was originally posted on May 4th 2013)