Equity market, with a USD 77.7 trillion traded in 2017, is the largest in the world. For such a huge market where timely selling or buying of shares can make all the difference, the financial industry has adapted itself, integrating technology to speed up the trades and transfer of ownership and money.
With the general perception that investors need significant funds to start markets investing, some equity firms have started offering fractional share investing, bypassing the need to buy a whole share. Major stock exchanges like the New York Stock Exchange enable the individuals to buy at least one share at a time. For stocks like Alphabet, Amazon or Eicher Motors, which carry a high price tag even for a single share, many smaller investors are left out of the action.
Looking at the need for such innovative products, Stockpile has started offering fractional shares of over 1,000 stocks and ETFs. It also has a unique gifting feature. You can request stocks as gifts or give a share of stock (or part of one) to someone special.
Motif allows one to build a portfolio of multiple stocks based on a particular investment theme or theory. Once a target portfolio or ‘Motif’ set, investors can buy in and get fractional shares of the included securities.
Similarly, Stash offers an opportunity to invest by theme with a focus in a specific industry, cause, or strategy, like green investing, tech investing, global entertainment, online media, and more. One can build a curated stock portfolio with fractional share support, along with a personalized guidance coach.
On the other hand, Betterment has developed robo-advisory services based on fractional investing. Investor just needs to fill out a questionnaire explaining investment goals and risk tolerance, and the robo advisor takes care of the rest investing the funds in a portfolio of ETFs in-line with the responses.
With continuous advancements in tech-based products, innovation will prove to be a key differentiator, especially when it comes to equity markets, considering the availability of numerous products and services and thereby this requirement of simplifying market access.
Credits : Akhil Handa,Manish Kulkarni