Day traders and stock speculators may have stolen global headlines last year, but closer to home it’s the rise of the passive investor which is worth watching.
Spaceship, which allows users to drip feed savings into a range of diversified portfolios, is a prime example. The platform with no minimum investment has seen explosive growth in the last 12 months, and now manages over $1 billion on behalf of nearly 200,000 Australians.
The multi-year bull market, fuelled by extraordinary stimulus, has no doubt helped lift all boats, funnelling hundreds of thousands of new investors into the market and fattening the returns of fund managers.
But despite the temptation of picking the next ten-bagger, it’s curious to see plenty of Australians choosing a ‘safer’ route, with the number of users – be it in the form of super or the platform’s investment product – almost doubling since October.
CEO Andrew Moore acknowledges the trend but promises there’s a lot more fuelling this Spaceship.
“Such a huge part of our growth comes via referral traffic from existing users,” Moore told Business Insider Australia, adding that the user experience and no minimum balances gets them to stay.
“We’ve broken down the barriers for young people. If you think you don’t have enough money to invest, well you do with Spaceship. Investing was expensive so we implemented a low-fee structure. People thought it was too complicated, or they needed a broker, or there was too much jargon, so we made it as simple as possible.”
Investors have three portfolios to choose from, depending on whether they would like to prioritise large established companies like Amazon, future-gazing businesses like Tesla and Square, or ethical and green companies like Atlassian.
From there they can simply invest what they can, with many setting up regular plans, such as $50 a month, to ensure they consistently build up their portfolio. All the while they receive regular communication explaining their investments and the strategy guiding the ship.
“It can be very rewarding for customers, because again, there’s that feeling of being in control, having made a personal decision to commit to building an asset and then seeing that labor bear fruit over time, that can be an incredibly satisfying experience,” Moore said.
After a year characterised by short squeezes, WallStreetBets, and GameStop, it marks the platform and its close rivals as something of a dark horse, building out a passive investment product.
“It’s a very deliberate approach, helping our customers to invest rather than trying to trade. I’m not suggesting that, one is good and one is bad, but we want to introduce new investors to the world of investing and knowledge,” Moore said.
Interestingly, Spaceship has now coasted past long-standing competitor Raiz (formerly Acorns) which was founded on the principle of auto-investing loose change left over from purchases. While Raiz boasts a larger user base, its customers typically carry smaller balances with total funds trailing by around $200 million.
Meanwhile the arrival of other micro-investing platforms like Sharesies to Australia shows there’s a real belief in this growing segment of inexperienced investors.
“Younger people have been been underserved when it comes to investment products and, in our case in particular, superannuation,” Moore said.
“They’ve been excluded, they have been disengaged, and what we’ve done is make investing interesting, transparent, engaging and at a lower cost. I think the work being done by a number of organisations across the market in opening up the market to younger people is really terrific.”