Ryan Johnson – Money for Young Kiwis
May 13, 2017
This week I’ve got a chat with Anthony Edmonds, Managing Director of InvestNow. InvestNow is a brand new investing platform based in New Zealand. The main big deal about InvestNow is that it gives you direct accessto buy into Vanguard funds (among others).
This is really exciting because normally to get into these funds you’ve got to pay someone else money to do it. That’s your money you want to be investing!
I’ve had quite a few people ask me about InvestNow and I’ve been pretty intrigued to know more myself. Anything which saves people money gets my automatic seal of approval, but it was great to get a bit in-depth.This is an official MFYK Deep Dive warning – there’s some heavy investing chat in here!
What is InvestNow?
Anthony: InvestNow provides Kiwi investors with the power and freedom to easily manage their investments online.
Using InvestNow you can construct and manage your own portfolio using a range of different investment solutions. This includes both PIEs and Australian Unit Trust funds, with funds from a wide range of investment managers including Vanguard, Harbour Asset Management and Fisher Funds.
Investors simply pay the fees and costs associated with the investments they select. There are no additional administration or entry fees charged by InvestNow.
This means, for example, that an investor in the Vanguard International Shares Select Exclusions Index Fund will pay ongoing management fees of just 0.20% per annum. The Cash Advantage Fund, which invests exclusively in a deposit with Rabobank New Zealand branch, has no fees.
Another significant benefit is that investors can place small amounts of money (as little as $250) in any fund they select. This opens up opportunities like the Vanguard funds for Kiwi investors, which normally are only open to wholesale clients with more than $500,000. InvestNow ensures investors get access to these funds on the same basis as the large wholesale investors.
InvestNow solves one of the significant problems currently frustrating investors. It removes the need for investors to go through new Anti-Money Laundering (AML) checks each time they move between different investment managers’ funds. Once you have been AML’ed on InvestNow, you can move freely between a wide range of different investment managers’ funds. Furthermore, InvestNow uses online AML checks, taking lots of the work out of this process.
Clients also get consolidated reports and tax information for their portfolio through InvestNow. This reduces the administrative aspects of managing your portfolio, and makes completing things like annual tax returns easier.
The InvestNow service offer accounts for individuals, joint accounts, family trusts and NZ companies. This direct channel then provides these investors with 24/7 access for buying and selling managed funds from some of the major fund managers operating here in New Zealand.
Ours is a no advice model that does not charge any administration or transaction fees. The only fees paid by investors are those that are within the funds themselves.
We currently offer 33 funds from 9 fund managers (the full list is here):
— AMP Capital
— Devon Funds Management
— Fisher Funds
— Harbour Asset Management
— Hunter Investment Management
— Mint Asset Management
— Salt Funds Management
— Russell Investments
We are making more managers’ funds available on InvestNow, and are working with Nikko and NZX owned Smartshares currently.
InvestNow is based here in Wellington and is owned and operated by Implemented Investment Solutions (IIS).
IIS is an innovative and dynamic specialist investment management company, based here in Wellington, with a team that has over 100 collective years of senior experience and expertise in the NZ investment management industry. IIS currently manages over $1.2 billion of clients, which includes KiwiSaver schemes, large charitable trusts and corporate superannuation funds, through to individuals.
How does it work? How are you able to not charge any fees on top of the fund fees? (I’ve had some people ask me if there’s a catch!)
Anthony: There are no catches!
It costs nothing to establish an account with InvestNow, and you can even join without any obligation to even invest or deposit money.
Our income comes in the form of the fees we get from the fund managers for their funds on InvestNow.
At the heart of this is a benefit that we are providing to the fund managers, being that we are making their solutions available to investors without the need for a middle man. Many fund managers aren’t set up to deal with lots of retail clients, and love the fact that InvestNow does this for them.
Once you have opened an account (which is free to do), if you decide to invest, you then transfer money into your InvestNow transaction account (a non-interest bearing cash account), You can then invest in any of the funds we offer (minimum investment amount is only $250).
Customers have 24/7 access to their portfolios and can raise buy and sell orders whenever they want. The transactions are processed each and every business day throughout the year, and subject to the settlement timeframe for each fund manager, most orders are transacted within 3-4 working days (note – we have a 12pm cut-off each business day for transactions).
Customer portfolios and holdings data are updated daily and a full set of reports are available online – all of which the customer can access whenever they wish.
What kind of feedback have you got from customers so far? How many customers are you getting?
Anthony: We are certain that any other retail financial group in NZ would give their right hand for the level of new accounts we are receiving each week. Having only formally launched in early March, we have hundreds of customers with tens of millions in portfolio investments.
Some of the key things our customers are telling or asking us are:
How clean, simple and straight forward the process is to open an account. It literally only takes a few minutes.
They can’t believe that we are able to offer wholesale funds for as little $250.
People want to know if we planning to offer more funds from Vanguard.
There is a growing segment of investors who want access to SRI funds, which we have been looking to add.
They love the fact that we are not charging any administration or transaction fees
They are pleased to see we are actively adding new fund managers to the service (we launched with five managers and now have nine, with more planned for later this month).
They would like to set up regular investment plans (this is something we have right at the top of our roadmap and development plans).
It’s fair to say we are really happy with the growth of InvestNow to date, and we are very optimistic about the outlook.
My readers are very interested in being able to access Vanguards cheap passive funds. Are there any plans to add more of these in the future?
Anthony: The Vanguard funds have certainly proven to be very popular amongst our customers, and yes we are in discussions with Vanguard about adding more of their funds to InvestNow.
We’re also currently working to include the Australasian index funds offered by the NZX-owned Smartshares. For investors who prefer passive investment styles this will create a great opportunity to build a diversified portfolio given we already have immensely popular Vanguard global equities funds on InvestNow.
What kind of tools do you provide customers with which to monitor their investments?
Anthony: In both numerical and as charts, customers can view their holdings and portfolio performance – both are driven from the daily pricing we receive for our funds.
Customer can also generate a full set of reports, for whatever period they would like, whenever they want to. This includes consolidated tax reports, making life simpler, especially if you are using the FIF funds like Vanguard.
To help clients navigate the fund selection process, we recently embedded the Sorted ‘Investor Calculator’ on our website. The Sorted tool helps clients determine their risk tolerance, which they can then use to select appropriate fund types. Sorted is operated by the NZ government agency, the Commission for Financial Capability. We are planning to continue providing tools like this to help empower people to have the freedom to manage their own portfolios.
What are your thoughts on the current investing landscape in New Zealand? With new innovators like you guys and Simplicity, it’s an exciting time to be an investor!
Anthony: It’s certainly a dynamic and evolving landscape. The demand from investors to manage their portfolios themselves is being met by the combination of technology, access to data and businesses such as ours making it as easy as it could possibly be.
Investors are actively wanting to gain a greater understanding of what it is they are actually investing in, which is reflected in the focus on socially responsible investing, and the value the fund managers are providing for the fees they charge.
There certainly is an appetite for greater transparency and choice, both of which are principles fundamental to InvestNow.
Hope you emerged from that finance chat unscathed and empowered with knowledge !
InvestNow is pretty cool and definitely a much-needed option for investors, especially new investors.
I know that chat sounded pretty intense but it’s a really simple process to sign up and get going with it.
Let me know if you give it a go!