By Aisling Finn on Monday 30 November 2020
Founder and CEO of Australian investment platform Stake, Matthew Leibowitz tells AltFi how it’s year has been so far and how its UK customers differ from its homegrown investors.
Australian investment platform Stake has only been in the UK since February 2020, but since then has amassed a sizeable customer base, most of whom are much more bullish than their friends down under.
The rise of the everyday investor has been well documented throughout the pandemic, with fintechs riding the investment wave.
Despite the 11 hour time difference between London and Sydney, AltFi caught up with Matthew Leibowitz, CEO and founder of Stake, to see just how well his fintech is adapting to the current climate and what might be around the corner for Stake.
Unlike his peers from the world of fintech, Leibowitz started his career as a lawyer, moving into derivatives trading later in his career at Dutch options trader, Optiver.
It was here that Leibowitz saw how deeply linked the US Stock Market was to how people outside of Australia invested: “In Australia, property was the thing that people invested in, but in the US, the stock market was how people made their money,” he told AltFi.
“Historically, it’s been really hard to access the US stock market, whether that be as a novelty or in reality. For instance, when Google listed back in 2004, if you got to buy shares and own Google stock it was an absolute novelty. But now, with the advent of technology, people can invest in that type of company much more easily.”
Founded in 2017, Stake is now available in its native Australia, the UK, Brazil and it’s next-door neighbour New Zealand.
Leibowitz still believes in the need for consumers to be able to access global markets:
“You should be able to access these opportunities no matter where you live,” he added.
Stake has been able to deeply engage with its UK customer base, Leibowitz told AltFi: “I think the growth in the UK can be put down to the increase of the active investor.”
With personal investing continuing to experience rapid growth, it will be interesting to see if Stake’s UK customer base will continue to grow at the same rate with Brexit just around the corner.
Under current EU regulation, some trading activities are limited, but Brexit could spell the end to this: “I think Brexit could offer a great opportunity for investors to get more access to [other] products.”
As well as rapidly increasing its customer numbers here in the UK, its British customers are much more bullish than its Australian users.
Users in the UK tend to place much larger individual trades than their Australian counterparts. In Australia, the average trade size is just over £1,520, whereas in the UK the average trade size is well over double the amount at just over £3,543.
This difference in attitude comes down to the average investor here in the UK being slightly older than in Stake’s native Australia: “In the UK the average age skews much closer towards 35 to 40, whereas in Australia it’s more like 25 to 30,” Leibowitz told AltFi.
“Traders in the UK are a little bit older, have a little bit more to invest with and are more sophisticated in terms of their experience,” the CEO added.
It’s not just in individual stocks that UK investors are trading at higher volumes than elsewhere in the world, UK investors also buying ETFs at a much higher rate via Stake’s platform.
Leibowitz explained why this is the case: “Because our customer base is a little bit more sophisticated in the UK, a lot of them are able to be qualified as sophisticated investors or elective professionals, which gives them access, under MiFID (Markets in Financial Instruments Directive) to ETFs that they can’t get anywhere else in Europe.”
“Roughly two per cent of our UK customer base have already applied to be accredited international investors, but 13 per cent of all UK trade value is in ETFs.”
While 13 per cent might not seem like a lot, when taking a closer look at the trading volumes we can start to see just how ETF-mad Stake’s UK investors are.
In Australia, ETFs account for 16.2 per cent of all trade value, with the average ETF trade size in Australia is just shy of £2,200, whereas in the UK Stake’s average ETF trade size is substantially higher at well over £10,159.
Similarly, 11.5 per cent of all Australian trades are for ETFs, with just 4.5 per cent of all trades here in the UK being for ETFs.
The median trade of ETFs here versus Australia also shows a stark contrast. In the UK, the median ETF trade is worth £8,275 compared to just £130 in Australia.
Users here in the UK are investing £9,637 on average on ETFs, compared to £1,639 down under.
Stake’s UK users tend to be less adventurous when it comes to stock selection, 38.9 per cent of the volume is in the top 10 traded companies, whereas in Australia just 29 per cent of all trades are.
“People will come home in the evening and will be trading Netflix instead of watching it. Wall Street opens at about three/four o’clock so a lot of the time they are sitting at home waiting to engage with the biggest stock market in the world,” Leibowitz told AltFi.
In both countries, unsurprisingly, Tesla is the most traded stock, with Apple coming in second in Australia and Zoom in second place in the UK—something that Stake attributes to a higher impact of the pandemic in the UK.
The usual suspects make an appearance in the top 10 for both countries, with Apple, Amazon and Nikola all featuring.
As well as investing in more well-known stocks, UK investors also seem to invest far more heavily into healthcare and pharma than their Australian cousins.
Interestingly, despite the aforementioned time difference, a massive three quarters (74.4 per cent) of Australian trades still occur when the US market is open.
Unsurprisingly this figure is higher for UK-based trades, with nearly 90 per cent occurring while the US market is open.
Overall, it’s clear to see that Stake has made a substantial start in breaking into the UK’s investment market. With plans to deepen its presence in the UK and expand further afield, Stake doesn’t look like it’ll be slowing down any time soon.