Start-up online fund distributor firm, Sharesies, has signed up about 2,500 members who have invested a collective $400,000 or so less than a month since launching its ‘beta’ version.
Sharesies, founded last year by a trio of former Kiwibank employees, offers the ‘closed beta’ members access to a range of NZX Smartshares exchange-traded funds (ETFs).
However, Brooke Anderson, one of the firm’s co-founders, said Sharesies was “working through the process of adding more funds that aren’t ETFs”.
“We have some great ethical and sustainable funds lined up which we hope to have on our platform in the next few months,” Anderson said.
She said members have contributed from as little as “a few dollars a day” to thousands of dollars each payday.
The Sharesies website says a risk tolerance tool can also be set to “determine what’s in your [investment] parcel”.
“We direct people to the free Sorted online tool that helps them determine which risk category may be right for them,” Anderson said.
The Financial Services Provider Register (FSPR) says the Sharesies parent company is registered to provide “wholesale and/or generic financial adviser services”.
Under the Sharesies model investors can stump with as little as $50 with the cash flowing through an online ‘wallet’ to an underlying nominee company – effectively the custodian – that purchases fund units.
“We did consider using a separate custodian but this materially increases the costs to provide our service,” Anderson said. “We also have the skill-set internally, along with working with a top legal firm, to build a safe, fast, efficient and specifically designed back-end for Sharesies.”
She said while the nominee company holds any investments and ‘wallet’ cash, the assets “are still all owned by the individual customers as they are held in bare trusts on behalf of each of our customers”.
“Like other custodians, ours too will be independently audited and comply with the statutory obligations of the Financial Advisers (Custodians of FMCA Financial Products) Regulations 2014,” Anderson said.
The FSPR says Sharesies Nominee is set up as a broking service (including custody) as well as: “Keeping, investing, administering, or managing money, securities, or investment portfolios on behalf of other persons.”
“When you make an investment, you choose an amount you’d like to invest into each fund and we buy as many units as we can – up to that amount,” the Sharesies website says. “If there is any change, we put this back into your Wallet.”
Officially set up this May, the Sharesies Nominee company lists founders Anderson, Sonya Williams, and Leighton Roberts as directors. Collectively, the three founders own about 60 per cent of the Sharesies operating company with four other minority shareholders.
According to the group’s website, Sharesies projects three different sources of revenue:
- an annual subscription fee of $30;
- rebates from underlying funds; and,
- the potential to “earn interest on any money sitting in Sharesies wallets (this is money not invested)”.
After the current round of ‘closed beta’ testing, Sharesies plans to move to ‘open beta’ phase in a few weeks, allowing investors to sign on direct from the website rather than requiring an invite.
“Once we reach certain milestones we will move out of beta, which we anticipate will be in a few months time,” Anderson said.
Aimed primarily at the ‘millennials’ market, Sharesies was part of the Kiwibank ‘Fintech Accelerator’ program.
Anderson said about 80 per cent of current users were under 40 but over ages ranged from 18 to 88 years old.
“This is great as we are targeting people who didn’t feel like investing was something accessible to them,” she said.