In the UK, the use of the Internet for investment is still in its infancy. Even the introduction of individual savings accounts in April, which allows for electronic commerce, has done little to change the situation.
But you will find using the Internet for investment difficult, unless you want to trade directly in stocks and shares. Only a handful of fund managers have set up facilities for those who want to buy equity-based ISAs over the Internet. These include Fidelity, Johnson Fry, and M&G, where you can buy any of their funds and NetISA (formerly NetPEP) which offers a tracker fund.
Buying a NetISA electronically is simple. You call the company on the net then fill in the application form on the screen including your National Insurance number. Payment can be made immediately by using a Switch or Delta direct debit card, or you can send a cheque through the post.
"Anyone uses the Internet for shopping will see that buying an ISA from us is just as easy," says Tessa Murray of M&G. "Many investment groups were not ready with their product range when the ISA era began on 6 April."
Using the Internet with these few groups works only for lump sum investments. If you want to buy an ISA through a monthly savings plan, banks will accept direct debit instructions only if they have your signature, so you will have to download the relevant form, fill it in by hand and send it off - so much for new technology.
When it comes to buying and selling funds, then if you want to use your PC, your choice is severely limited. Until recently, only Fidelity, through its WebXpress service, allowed this. And it registers 10,000 to 20,000 hits a week since it commenced service a year ago.
In the past couple of months, Johnson Fry has begun to offer a similar facility. You access its main sites, enter the sub-site, fill in the form on screen, type in a Pin-type number of your choice and a password, send it back to the managers and you're ready to go.
"With our system, customers can list their individual details on screen," says Zach Leonard of Fidelity. "If they use independent financial advisers (IFAs), they can also access the site. They can see their holdings, get valuations, split them into sectors, get geographical breakdowns, have the latest view of the fund managers, whatever and whenever they want. But most important, they can buy, sell or switch their investments between our funds."
Fidelity and now Johnson Fry are in the forefront of Internet developments for unit trust and OEIC investors. Autif, the trade body for the management groups, has a committee made up of representatives from Fidelity, Gartmore, M&G, Perpetual and Schroders, looking at how the industry can catch up and make more use of the Internet for direct trading. "By the end of the year, we hope to have a pilot scheme for the leading IFAs, which we can broaden out next year," says Anne McMeehan of Autif.
Many leading groups have websites. You can find them by typing in www.company name.co.uk. These will show the basic details of their funds, and many will have an application form you can download for printing. You can also try the Autif website, which links you to those groups with their own sites. Surprisingly, many still do not have a website. Under the initial A alone, those include Abbey, Abbey National, Aberforth, ABN Amro, AIB Govett, AE Sharp and Axa Sun Life. Another leading group still without a presence on the Internet is Jupiter but its spokesman, James Harris, says this will be remedied within a fortnight, providing basic information and application forms that can be printed. "We decided not introduce screen trading until possibly later this year," he says.
Many have delayed developing their use of the Internet,citing the need to get ready for ISAs and the overhaul of their systems to prevent any impact from the millennium bug.
"But there are three other main reasons," says Lindsay Firth-McGuckin, of Johnson Fry. "Most groups are worried about safety of information, not understanding how secure systems are; they also worry about how IFAs will react if clients deal directly with fund managers; but most important is lack of will at the top. Most groups are run by middle-aged men who can't type and can't see the benefits of the Internet." Daniel Godfrey, director general of the AITC, the industry's trade body, says: "Our members' funds are traded on the Stock Exchange, so you can buy them cheaply and quickly through any of the execution- only broking services available on the Internet."
Barclays Stockbrokers and Charles Schwab Europe are the leaders in offering real-time dealing services. They are easy to join on screen and allow you to trade in shares and investment trusts. Costs are similar to other execution-only services, around pounds 60 for a pounds 5,000 deal. But Internet trading is likely to become cheaper.
"Transaction costs are between a tenth and fifth of those for using phone services," says Zach Leonard.
Contacts: www.fidelity. co.uk.; www.mandg.co.uk.; www.netisa.co.uk.; www. johnsonfry.co.uk.; www. autif. co.uk.; www.aitc.co.uk.; www.barclays- stockbrokers.co.uk.; www.schwab-europe.com.