Wellington-based direct fund platform, InvestNow, has expanded its reach into the term deposit (TD) market after signing up a second bank last week.
Under the deal with SBS Bank, InvestNow will grow its distribution reach to just under 20 per cent of the NZ TD market following its inaugural agreement with BNZ inked in October.
In a statement, InvestNow general manager, Mike Heath, said for the first time investors could now access TDs from different providers without opening multiple bank accounts.
“The latest Reserve Bank of NZ statistics show there’s about $185 billion in term deposits – that’s more than three-times the size of KiwiSaver,” Heath said. “We think it’s critical that New Zealanders are able to easily invest in the best term deposit for their circumstances at any one time regardless of which bank offers the product.
“As a proud Kiwi bank with a long heritage in New Zealand – and competitive term deposit rates – we expect SBS will be popular with investors on InvestNow.”
Shaun Drylie, SBS chief executive, said the deal was a “great fit” for the two NZ-owned firms.
Drylie said as well as offering more choice to investors, it made sense to include TDs on the fund platform as part of a diversified portfolio management approach.
“InvestNow provides this option as a one-stop shop,” he said in the release. “It aligns with our philosophy of extending our reach into new channels, allowing more Kiwis to access our products and connect with our ‘customer owned bank’ story.”
Collectively, the BNZ and SBS offerings represent about 16.5 per cent of the local TD market.
Launched early in 2017, InvestNow has grown to more than $250 million under management across a suite of about 90 funds and 16 underlying investment firms.
Meanwhile, another Wellington-headquartered platform initiative has got off to a flying start in October.
Hatch month one “more than exceeded” expectations of founder Kristen Lunman.
Lunman said the online share-trading platform, which for now specialises in the US market only, attracted over 1,000 sign-ups who traded more than $1 million since launch in October.
“We were a bit worried given that we launched just as uncertainty hit markets – and the NZ dollar dropped,” she said. “But clearly there were long-term investors waiting for the opportunity who understood the risks.”
Hatch, ensconced inside Kiwi Wealth, offers investors access to the New York Stock Exchange- and NASDAQ-listed equities including a NZ-first option of buying fractional ownership of shares.
The online platform charges US$3 per fractional equity trade or 2 cents per share trade (with a minimum US$8 fee). Following the launch, Hatch also dropped the in-built foreign exchange fee from 0.8 per cent to 0.5 per cent.
According to Lunman, while lump sum investors could swallow the forex fee, the impost was a little less digestable for those looking to drip-feed into markets.
“Some investors want to set up auto-payments where the foreign exchange fee might have made that less attractive,” she said. “So we wanted to remove that barrier as much as possible.”
To date, Hatch investors have tended to be male with a bias to tech stocks, Lunman said.
“It was surprising that given all the noise about ETFs [exchange-traded funds] that more than 90 per cent of Hatch clients invested in direct stocks – and largely tech companies,” she said. “I guess these are early-adopters wanting to access the market.”
After the early rush of clients in the first few days post-launch, Hatch member sign-ups have stabilised, Lunman said, as a steady flow of investors continue to test the system.
She said experienced investors were comfortable using Hatch to execute trades but a second-tier of clients would probably spend some time gaining confidence in the process.
The Hatch app has “worked beautifully” since launch, Lunman said, although one thing too her by surprise.
“We were overwhelmed in the first week by customer queries – we didn’t expect there would be so many,” she said. “There were more than 500 customer support enquiries… and a few late nights for me answering them.”
Hatch would look to add a few technical components shortly including opening up to trust accounts, allowing stop-loss orders and other platform “bells and whistles”, Lunman said.
“We’ve got two or three other ideas in mind,” she said. “We could open the existing system to new markets. Or we might look to solve other problems such as the under-engagement of females to investing.”