Ready to invest in 2021? A new platform backed by investing heavyweights that oversee over $2 trillion cuts through the jargon, demystifies the investing process and aims for positive change — Here's how it works
- A new investing platform, the Big Exchange, recently launched aiming to demystify the investing process and create positive change.
- "One of the biggest barriers to investment is jargon or far too much information being presented to people, when in actual fact, you can make these informed decisions with more distilled information," said Jill Jackson, managing director of the Big Exchange.
- The platform is co-founded by the Big Issue and backed by 23 founding partners, including investing heavyweights such as Aberdeen Standard Investments and AllianceBernstein.
- "We've concentrated really hard on making that as easy as possible for people," Jackson said.
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Every so often, a tough question can spark a great solution.
For Nigel Kershaw, executive chairman of the Big Issue Group, he was asked, how can an average Big Issue reader invest in funds that will make a difference?
A Big Issue reader can be anyone. The magazine is sold on streets throughout the UK at £2.50 a copy. Since the launching in 1991, sales have topped 200 million copies. The Big Issue Group also has projects in at least nine other countries.
A purchase of the Big Issue can make an impact on the lives of vendors, who are often homeless, or virtually homeless, and face challenges with inequality and/or poverty. Selling the Big Issue provides a way to earn an income, and they act as micro-entrepreneurs.
Making a similar impact with investing can be more challenging. Trying to make sense of the impact of a fund combined with an investor's personal financial goals and risk profile can be overwhelming, especially for those that are new to investing and unfamiliar with the jargon and the process.
Kershaw started thinking about a solution to the problem. He wanted to create an accessible platform that would offer funds that provide not only financial returns, but also create positive change for the planet and society.
In October, this vision became a reality when the Big Issue Group launched the Big Exchange app.
Retail investors can choose from 40 actively managed and ethically-focused funds run by 12 different established investment houses, including heavyweights such as Aberdeen Standard Investments, AllianceBernstein and Liontrust. These three firms alone boast over $1 trillion in assets under management.
The 40 funds on the platform account for £22 billion ($29.3 billion) in total assets under management.
"We've got a number of other founding partners that have been hugely supportive to the business, really a powerhouse of a coalition," said Jill Jackson, managing director of the Big Exchange.
With 25 years of experience in the asset management industry, Jackson is passionate about making it easy for investors to see the difference their money can make on a range of levels.
So how does the Big Exchange achieve that?
Through democratizing information and removing the jargon, Jackson said.
The Big Exchange was designed following three steps:
Step 1 – Deciding what to include
To join the platform a fund needs to pass the impact methodology and assessment, which was developed independently by Square Mile Research.
The in-depth methodology requires a fund manager to provide a significant amount of data ranging from stock selection, the status of impact reporting and how the manager engages with companies.
"We flag the controversies within any portfolio, for example, if a manager held a cement company then that could be deemed to be controversial, because it's making cement. But the whole purpose of the investment is to create another technology around developing the cement that makes it less carbon-intensive," Jackson said."Customers should be able to see the controversy, and see the rationale from the fund manager."
This process is reviewed annually, which Jackson is comfortable with, as the current portfolios have a low turnover. Over time, as the platform develops, this will happen more regularly.
Step 2 – Providing a sustainability assessment
The impact methodology helps the Big Exchange provide a summary to retail customers on the current stage of the fund's impact both in relation to the United Nations Sustainable Development Goals, as well as on overall ESG.
A medal is provided to funds on the platform to highlight the level of impact:
- Gold medal – Impact leader
- Silver medal – High positive impact
- Bronze medal – Positive impact
In addition, funds can be flagged with either a people or a planet icon, in some cases both, which link to the UN SDGs.
"One of our advisors at the outset, had [the UN Sustainable Development Goals] all cut out on a kitchen table and was lining each of the UN SDGs up to whether it was people or a planet," Jackson said. "And that's how we explain it to customers … most people aren't necessarily aware of [the SDGs] existence however, they're very clear on what constitutes something for society versus planet."
Step 3 – Simplifying investing
The icons and medal system help simplify the impact of the fund. But the Big Exchange still wanted to simplify investing more broadly.
"One of the biggest barriers to investment is jargon, or far too much information being presented to people, when in actual fact, you can make these informed decisions with more distilled information," Jackson said.
The platform distills information into fund profiles, helping investors make decisions quickly based on information typically found in a variety of documents, from fact sheets, to prospectuses, to impact reports.
For investors that are completely unsure of what to pick, the Big Exchange also offers pre-selected investment bundles based on risk appetite – cautious, balanced and adventurous.
The bundles are a way to support consumers and make investing more accessible, compared to having to research 40 individual funds, for example, Jackson said.
But why should investors trust the platform?
As the platform is brand new, it is understandable that investors may be hesitant to try it when there are other established players on the market.
However, Jackson wants to remind investors that the Big Exchange is simply providing an intuitive access point to funds from well-established investment houses.
"I think when people are parting with their hard-earned money, that's something that's really emotive for most people," Jackson said. "So it's really important that we understand that and one of the reasons that we've tried to make the minimum investment low is so that people can dip their toe in the water and see how they like it.
"We've concentrated really hard on making that as easy as possible for people."
Over time, the Big Exchange hopes to grow the fund universe, as well as increase bundles whether that be thematic bundles or for broader spectrums of risk, Jackson said. She also noted she would be open to having ETFs and investment trusts on the platform as long as they meet the impact methodology.
"The skill for us is going to be around still keeping it simple; from a customer user experience. That's where we can really add value for customers in terms of helping them navigate that," Jackson said.
The platform recently launched a tax-free savings account for children. Now it's thinking even bigger, with personal pension plans and open banking functionality on its roadmap.
"I think for us, joining the dots for people's finances is really important," Jackson said. "So can you use open finance to allow people to connect the way that they spend their money, and be able to see the impact of how they're spending their money, how they're saving their money, how they're investing their money, both for them personally, but also for others and for the environment."
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