Here’s an astonishing number about Australia’s $2 trillion sharemarket: just 4% of people trade online annually, despite the fact that it’s 22 years since the CBA launched CommSec, now the country’s largest online stockbroking firm.
So the Commonwealth’s broking arm has taken matters into its own hands try make online trading easier and also more affordable, with a smartphone app called CommSec Pocket.
It’s the Big Four bank’s response to a bunch of fintech startups such as Raiz Invest, the ASX-listed micro-investment platform launched in 2016. Like the new CommSec product, it lets people make small investments in Exchange Traded Funds (ETFs). Raiz has close to 200,000 users and lets you invest $5 at a time in a choice of seven different ETFs.
Just to stop for a sec if you’re, like, WTF ETF?
An exchange-traded fund is a basket of different stocks that in itself is traded on the market, just like shares. So as the value of the shares in the portfolio rise and fall – and the idea is you combine the shares to manage risk – the value of the ETF itself rises and falls.
Another Sydney fintech, Spaceship Voyager, backed VC firms such as Horizons Ventures, AirTree Ventures and Sequoia Capital, is also playing in the ETF micro-trade space and launched 15 months ago. It now has close to 40,000 customers and two portfolios – an ASX200 fund and one curated by the startup’s investment advisers. There’s no minimum investment.
CommSec Pocket is matching Raiz with seven ETFs that offer a bit of a vibe thing – if sustainability matters to you, there’s a fund, as well as a tech one.
Here are the seven options with Pocket:
- Aussie Top 200 – The largest 200 companies in Australia
- Global 100 – 100 global blue-chips
- Emerging Markets – Top companies in China, Taiwan, Korea and more
- Aussie Dividends – Large Aussie companies that consistently pay above-average dividends
- Tech Savvy – Top 100 tech and non-financial NASDAQ companies
- Sustainability Leaders – Global climate change leaders with no ‘unethical’ activity or investments
- Health Wise – Global healthcare, biotech, medical and pharmaceutical companies
CommSec Executive General Manager Richard Burns said people can invest in an ETF with as little as $50, compared to the minimum first investment of $500 for most listed securities; and Pocket also offers automated regular investing.
“We know that many people find investing in shares out of their reach or too complex. We’ve broken down those barriers by significantly reducing the amount needed to get started, reducing the cost of investing as well as simplifying choice,” he said.
But a bit like those previously annoying buy now thankfully gone ATM fees, it will cost you $2 in brokerage on every trade, so it pays to investment larger amounts – up to $1,000 – rather than in $50 blocks, since that’s the difference between a 0.2% fee and a 4% one. The good news is there are ongoing account keeping fees, but you will be riding the ups and downs of the sharemarket.
CommSec’s been been pretty good at this stuff for a long time, becoming the first broker to offer trading on a smartphone when it launched Australia’s first iPhone trading app in 2008.