Superhero, Robinhood…..Sharesies?

The Kiwi counterpart of US online direct investment platform Robinhood is sounding out the Australian market for possible expansion. Brooke Roberts, co-founder of the Wellington-based Sharesies, said the firm was recruiting an Australian country manager.

“We are looking at launching Sharesies in Australia,” she said. “But at the moment we’re working on a product that might fit the market there.”

The business created the Sharesies AU Group company (equally owned by the three founders Brooke Roberts, Leighton Roberts and Sonya Williams) late in November last year, after forming Sharesies Group (wholly owned by Leighton Roberts) the previous month. However, the Sharesies NZ operating business features more than 20 owners, including the founders.

Australia is well-served with direct share-trading platforms, including the recently launched Superhero, but Roberts said Sharesies was gathering information on Australian investor preferences to help refine an offering that might find a niche across the Tasman.

The company has seen phenomenal growth in its home country since launching from a standing start in 2017 as a direct-to-consumer fund platform. In its first two years of operation Sharesies signed up about 20,000 members, pitching to first-timers especially, with a low minimum investment requirement.

But since early 2019, and particularly since the COVID-19 crisis, Sharesies has seen hyperbolic growth, hitting over 150,000 members earlier this year.

“We’ve got about 250,000 members and NZ$850 million ($809.5 million) under management now,” Roberts said.

In fact, all direct-to-consumer investment platforms in NZ including InvestNow and Hatch (which deals in US shares only) saw membership spike considerably this year, in line with Australian and US trends.

As previously published in The Inside Adviser article ‘Retail investors smarter than you think’, Gemma Dale, director of SMSF at nabtrade, said online share purchases spiked this year following the start of COVID, and the characteristics of the activity defied preconceptions. There was no ‘Robinhood-like’ spruiking to cause ill-informed decisions, Dale said, referring to the controversial owner of a trading site in the US, which was less-than transparent with its charges, resulting in traumatic results for some members.

Nabtrade’s experience was that the surge in buying was driven by millennials, who tended to buy into the Top 10 stocks which performed better than the rest of the market. Dale’s concern was that these neophyte investors’ experience, on average, was so good that they might think share trading was easy, and expect such good results again in the future.

Starting with a small suite of index funds in 2017, over the last couple of years Sharesies has added direct local share trading (joining the NZX as an accredited broker) and earlier this year, US equities.

Next cab off the rank is direct ASX stocks, a move Roberts said is imminent. “We’ll be adding the ASX next year.” Similar to the Australian direct investor experience during COVID, Sharesies members stayed cool during the March market panic, Roberts said.

A recent Sharesies survey, carried out by research house Colmar Brunton, found many Kiwi investors, particularly those on its platform, were piling more into the market during the coronavirus era.

“… some seem to be investing more, with 17 per cent of New Zealanders (non-Sharesies customers) and more than half (53 per cent) of Sharesies customers saying they’re investing more since Covid,” the NZ consumer survey says.

“We also found people saying they will buy more shares when there is a dip in the share market (23 per cent), which is up from 13% in 2019 and 12% in 2018. For Sharesies customers, 44 per cent said they’d be keen to invest in more shares if things took a turn again.”

Roberts said the bulk of Sharesies members tend to be buy-and-hold investors rather than day-traders. While membership ages on the platform range between “zero and 97”, she said the average Sharesies investor was under 40, lending weight to the secular shift of the millennial generation to online investing.

Part-owned by NZ second-hand goods platform TradeMe, Sharesies has recently completed another capital-raise to spearhead the next phase of growth. Staff numbers have grown from 40 at the beginning of this year to more than 100 at the latest count, Roberts said.

– David Chaplin is editor of Investment News NZ.

David Chaplin Investment News NZ