Robo-advisers were once the innovative new start-ups of the investment world, but now a new breed of fintechs are entering the market: apps targeting niche investors.
So who are the newcomers?
Wahed Invest’s Halal Stock Tracker is a fine example of the new trend. The freshly launched app targets Muslims who want to keep their money in line with their faith by offering investments in globally listed Sharia-compliant businesses.
The stock tracker launched in the UK in August, a bit more than a year after its US debut. It has a minimum investment of £100 and $100, respectively, and provides an official qualitative Sharia certification and socially responsible investment (SRI) review of the ethical policies of any stock that is selected, for £9.99 per stock.
Wahed Invest chief executive Junaid Wahedna said the app targets Muslims who, in the absence of readily accessible faith-based investment options, keep their money in cash or real estate.
‘Other fintech apps are competing against each other, but for us, the main challenge is trying to change that mindset,’ he said. ‘We want to educate and inform people that this can be done and that it is available.’
The number of UK investors is growing twice as fast compared with the US, according to Wahedna. In Britain, the app has more than 1,000 clients and the firm is expecting to be trading £1 million per day by the end of its first year.
Judging by its last fund-raising results, investors seem to have confidence in the idea. In October, the tracker raised $8 million (£6.3 million), giving a valuation of $100 million.
Impact and ESG
Tapping into a slightly more saturated market is Tickr, an app dedicated purely to impact investing that went live at the beginning of November.
Allowing portfolios of £5 or above, it promises to identify and vet publicly listed businesses in order to offer investment in companies committed to addressing large-scale social and environmental problems.
Tom McGillycuddy and Matt Latham, the ex-Barclays Wealth duo behind the idea, took the leap of faith to start anew six months ago and raised £870,000 in a funding round in October.
Although McGillycuddy agrees that asset management is going through an SRI fad, Tickr’s uniqueness is that it is not about being socially responsible alongside unrelated products. He said: ‘This stressed our cause and resonates in a real way with people who are serious about impact investing.’
The app is now available on iOS by invitation only but is expected to hit the Apple app store for mass download in the next few weeks.
So far, the predominantly targeted age range is 25-35, but people outside that have expressed interest. The team said early feedback has been encouraging – people, many of whom are not even in finance, are contacting them trying to get an early invite to the service.
The plan for the next 12 months is to get rolling in the UK and move to other European markets, such as the Nordic countries, where demand for such offerings is higher.
One for the more experienced
A more upmarket platform that became available in the UK last month is Moonfare, a Berlin-domiciled start-up that offers experienced – but not overly wealthy – investors access to top-tier private equity funds that normally require a minimum investment of eight figures.
With its own entry point at €200,000 (£117,200) in Germany and £100,000 in the UK, Moonfare’s minimum marks quite a difference from the single-digit ones offered by other fintech firms.
Founder Alexander Argyros, formerly of JP Morgan and private equity firm KKR, said the sum is reasonable for the company’s typical clients, who include individuals working in law firms, consultancies and banking. Although it has a long-term goal to reduce the minimum, this would require working with regulators to ensure liquidity, which can prove time consuming.
Having launched in January, the platform now has 200 investors and 1,000 members, and manages funds of more than €60 million (£53 million) across Germany, the UK and Switzerland. It buys the private equity funds of firms such as EQT, Warburg Pincus and Carlyle. It charges an annual 0.5% fee and a one-off fee of 1%.
Argyros is optimistic about the future. By the end of 2018, he expects assets under management to have risen to €100 million and platform clients to 300.
‘The market is there, but it hasn’t been explored yet,’ he said. ‘There are around five million people in Europe that would fit the bill to be our clients. We are the only platform in the continent that allows investors to subscribe to their favourite private equity fund within 15 minutes.’
The firm raised €3 million in seed funding in 2017 and another €10 million in May.