Canstar spoke to Hatch general manager, Kristen Lunman, to see what fractional investing is all about and how Hatch can help Kiwis in their investment journeys.
What were the reasons behind creating Hatch?
Hatch’s mission is to make world-class investing possible for all New Zealanders, no matter how much money they have in the bank. Before Hatch, self-directed investors were mostly cut off from global investing opportunities, unless they were willing to commit significant time and money to do so.
New Zealand is a relatively small economy. The majority of our assets are concentrated in NZ: our jobs, income, homes, and investments. The market capitalisation of the entire main board of the NZX is a fraction of the market capitalisation of a single technology share. So, we created Hatch to let Kiwis diversify their portfolios and lessen their concentration risk in NZ.
By leveraging technology and strategic partnerships, we opened up a world of investments to everyday Kiwis who expressed they would love to buy into the successful brands that they know and love. New Zealand may be geographically remote, but there’s no reason in this digital age to limit ourselves when it comes to world-class investment options and strategies.
Hatch uses “fractional investing”. Can you please explain more on how this works?
Fractional investing allows someone to diversify a portfolio better, even when they are starting with a small amount. Not only can Kiwis invest as little or as much in a share, but it also means every dollar they have set aside can be invested in one transaction.
Hatch is the first of its kind to bring fractional investing to New Zealand, which lets Kiwis buy portions of shares in companies they might not usually be able to afford, like Amazon which trades at roughly $2000 a share.
How does Hatch help a first-time investor?
All you need to start investing is a couple of hundred dollars to buy shares in some of the world’s largest companies, track their progress, and learn as you go. Hatch is an extremely low-cost way to build financial knowledge and “learn by doing”. We’ve found that even hesitant investors are starting small and learning about the world of investing. Roughly 50% of our investors have told us that they’re using our platform to access global markets for the first time.
Through fractional investing, an 18-year-old just starting out building their portfolio has the same world-class investment opportunities as an experienced investor. We pride ourselves on being easy to understand and affordable. That was always our plan when we designed our user interface, content strategy, and fee structure. We’ve taken the most complex processes, such as international verification requirements and foreign exchange, and digitised them so investors can be up and running with a Hatch account in under 5 minutes.
How does Hatch support ethical investing?
It’s so great to see investors increasingly insisting on putting their money into investments that contribute to the well-being of the planet and align with their personal values. With over 3000 shares on Hatch, investors can tailor their portfolios to their beliefs. We have many socially responsible exchange-traded funds (ETFs) on Hatch that offer investors a diversified way to put their money where their principles are.
This focus on environmental, social, and governance factors is a growing investment strategy where investments are screened for positive characteristics. For example, a fund might exclude corporations involved in weapons, gambling and palm oil. Kiwi Wealth has been an early leader with responsible investing in NZ by implementing (ESG) principles across all managed funds. With Hatch – in addition to ESG exchange-traded funds – investors have so much choice with companies and ETFs that focus on anything from clean-green energy to sustainability and gender diversity. It’s certainly an industry set to grow, and we love seeing that our investors want to build their wealth and make a difference in the world too.
Canstar’s verdict: Why Kiwi Wealth won a 2019 Innovation Excellence Award
For the first time in New Zealand, Kiwi Wealth’s new digital investment platform – Hatch – gives consumers a way to fractionally invest in the US share market.
As the name suggests, fractional investing allows investors to put their money into a fraction of a share, instead of the entire share.
“Kiwi Wealth lowers the entry level for first time buyers by creating a fractional investment platform and this played a huge part in Kiwi Wealth winning a Canstar Innovation Award this year,” says Canstar NZ general manager Jose George.
Hatch makes it easier for novice investors to start their investment journey, as well as providing an easy-to-use platform for those who already have investment experience.
“From Apple to Netflix, and ETFs from the world’s biggest fund managers such as Vanguard and BlackRock – investors can use Hatch to buy shares in companies they know and love,” says Mr George.
Kiwi Wealth’s Hatch makes investing possible for all New Zealanders looking to invest in shares, regardless of how much money they have in the bank.
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