Investing with Spaceship Voyager
- Positives – dirt cheap way of accessing a portfolio of Australian and overseas shares.
- The index portfolio is a equal weighted portfolio, rather than the more traditional market weighting, giving an different exposure portfolio.
- App looks sexy and clean.
- Negatives – Investment methodology is opaque. The Universe portfolio has a strange mix of smaller, Australian growth companies and large, international mega-caps.
- Unsure how the company behind Spaceship Voyager can become profitable (and if they go bust, no more Spaceship) by charging such low fees for active investments.
Got loose change? When I was a bit younger, we’d save the small coins in a jar and every now and then trip down to the bank to deposit the loot (and spend a dollar or two on lollies, naturally). Saving small amounts has gotten a more sophisticated, both in terms of technological underpinning the platforms and the financial tools used. Micro investing is the process of building up an investment portfolio by automatically investing small amounts. Spaceship Voyager is a relatively new entrance in this market in Australia.
In Australia there are now a number of micro investing apps, including the ASX listed Raiz Investment (ASX: RZI) (formally known as Acorns) and Spaceship Voyager. There are a couple of other robo-advisor platforms available to Australian residents including Clover, Six Pack and Stockspot, that use a website, rather than an app. Spaceship Voyager allows the smallest amount to be invested and probably has the lowest fees of all the platforms listed.
What is Spaceship Voyager?
Spaceship Voyager is a micro investing app, that allows you to invest amounts as small as $1 into one of two portfolios.
What the heck is a robo-advisor platform?
Robo advising is a concept that has dramatically increased in prominence since the GFC. The basic premise is to automate investments into a predefined portfolio, usually consisting of listed ETFs.
The benefit to investors is that it provides a low cost alternative to traditional investment advisers. The downside is that provide limited investment options into fairly fixed portfolios.
Most robo advisors base their investment structures on Modern Portfolio Theory (MPT), a concept that having been around since the 1950s, so isn’t really so modern anymore. Without going into too much detail, MPT is a theory on how an investor can construct a portfolio to generate a certain return for a given level of risk, forming what is called the efficient frontier.
Does the theory work? No idea, but it’s sold a lot of product and made a lot of careers.
So, how does Spaceship Voyager work?
Spaceship allows you to make small, regular or one-off investments into one of their two funds. The app also has a streaming news service, updated daily, with articles on investments the fund has made. There is no minimum investment amount required – I invested $1! Setting up the investments was pretty simple and done all through the app.
All pretty simple really.
So what does it cost?
Nothing’s free in life. Here is a summary of the fees. Overall, the fees appear pretty low. Index products and ETFs are usually cheap, but Spaceship Voyager seems to have taken it to a new level.
|Spaceship Universe Portfolio||0.10% per annum for accounts over $5,000|
|Spaceship Index Portfolio||0.05% per annum for amounts over $5,000|
What are the investment options?
The Spaceship Universe portfolio invests in high growth companies listed on the ASX and international stock exchanges. Spaceship Voyager select investments using their “Where the World is Going” rating, which they believe identifies companies having a sustainable competitive advantage.
The investment portfolio includes a wide variety of investments, from smaller ASX listed growth such as A2 Milk and Infomedia, through to global mega caps such as Disney, Nike and Samsung. Geographically, the investments are concentrated in the US (about 50%), Australian (about 17%) and China (about 10%), with a smattering in Europe and nothing in the UK.
The Index portfolio aims to track two bespoke indexes. An equal weighted index over the ASX top 100 and an equal weighted index over some of the global top 100. They invest directly in the listed shares themselves, rather than through an ETF or other derivatives.
The companies in the top 100 ASX is pretty easy to identify, however the index only invests in some of the top 100 global companies, without identifying which ones are excluded (and why). This makes it hard to know what you’re investing it or what methodology is used.
IF you’re looking for a point of difference to other robo-advisors, the use of equal weighted indexes is it!
Your thoughts on the matter Jim?
This is an ultra-cheap way to gain exposure to an equal weighted market index, with either an Australian or global focus – which is a positive.
On the flip side, I have a couple of concerns about both the investments and the company.
Firstly, understanding how they determine the investment portfolio is unclear. There doesn’t appear to be a publicly available methodology for determining which shares they invest in. The Universe portfolio invests in a mixture of Australian and overseas shares using its “Where the World is Going” rating. As the PDS states, this is a “rules based, market weighted, index which are actively managed”. So its not really an index portfolio, as normally understood.
My concern with Spaceship Voyager as a company is how are they going to make money? Competing with the global giants like Blackrock and Vanguard is hard, especially when their fees for their standard products is low. I just question how a Spaceship can cover its costs with a 0.05% annual fee for amounts over $5,000 in the Index portfolio. Even in this day and age of fully automatic investing, there are still custodian, back office and other costs to cover.
With 40 staff to cover costs for, they need to grow FUM rapidly to make ends meet. Total FUM (per the website) is around $270M, including amounts invested in Spaceship Superannuation. Assuming it charges an average of 0.05%, that’s not really enough to cover salaries (you can do the maths, but it’s less than $2mil per year).
While it might be might have a nice looking app, I get the feeling this company is trying to be all “fin-techy”, without providing anything special in terms of investments, other than a dirt cheap investment option. The technology isn’t particularly innovative and the data / analysis provided is pretty much all sourced from 3rd parties and already available elsewhere.
This is general advice only. Please download and read a current copy of the Product Disclosure Statement and seek professional investment advice before making any investment decision.