Snowball turns focus to investor behaviour

A month after the launch of its new look and expanded offering, online investment platform Snowball says it has been a good move but also prompted some further questions about what exactly triggers investors to commit their funds.

“It is a little bit trial and error in terms of what triggers people to come through and invest is different, as you'd expect, from companies when they're doing a capital raise, because there is a window where they're raising,” says Snowball Chief Executive and co-founder Simeon Burnett.

“So from an investor's perspective, there's sort of a bit of time pressure to kind of make a decision, commit or not with these funds.”

"With managed funds, or even any sort of listed entity where you've got it there all the time, there's not that time pressure to necessarily invest.”

Snowball began life as a company crowdfunding platform and 10 years on, the addition of the managed funds has been positive, says Burnett, with the company not quite at the $10 million mark a month in, but tracking ahead of its forecasts. The funds for the initial launch were carefully chosen - PCG Diversified New Zealand Private Debt Fund, Federation Alternative Investments II, Salt Long Short Fund and Daintree Core Income PIE.

The mix is around 50/50 of new versus existing clients, he says. Face-to-face events are proving valuable for finding out more about what people want to see.

“There's only four of them there at the moment, to get them into the market. We want to allow people some time to get their heads around them, and then we'll start to introduce other things.”

Burnett says interest has been spread fairly evenly across the different funds, with options to suit varying risk/return appetites. Although the daily liquidity of the Daintree fund may be appealing for some investors who want an alternative to a term deposit, he says the other funds are not really designed to be traded frequently.

“Longer term, what we hope is most people treat it like a KiwiSaver, where you just chip away every month, every quarter, or whatever the cadence is, and then just sort of building a better position, and let the funds sort of do their thing.”

How best to educate and inform its platform users is something Snowball is considering, says Burnett.

“You don't want to overwhelm people with a library of content, but just having some good articles for people to read, you know, like, what is a private credit fund? What is a private equity fund? How would one think about them, in terms of, you just say you're 45, got half a million bucks. What would you allocate?

“So having some, not financial advice, but sort of indicative-type model portfolio material for people to have a think about and go, ‘this could be something interesting’ or not, depending on where they're at for them and how they're thinking about building their portfolios over time.”