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OpenInvest platform adds BlackRock to its marketplace

Thu 10 Sep 2020

OpenInvest, the online marketplace giving self-directed investors access to some of the world’s most highly credentialled asset managers, has taken a major step forward today with the addition of model portfolios managed by BlackRock, one of the world’s leading investment managers.

By giving every Australian access to BlackRock’s cost-effective multi-asset class solutions, built with iShares ETFs, OpenInvest is continuing to change the landscape for individual investors.

Co-founder and CEO of OpenInvest, Andrew Varlamos, believes the opportunity for mainstream Australians to obtain digital access to portfolios managed by some of the world’s best asset managers couldn’t be timelier, particularly for SMSF trustees.

“The genesis of OpenInvest was our belief that most self-directed investors would like at least some help, but thought they couldn’t afford it, didn’t know how to access it, didn’t speak the language of asset managers, and didn’t think it was possible to get professional help but still retain the degree of control they wanted,” Varlamos says.

“Over the past six turbulent and unpredictable months, there’s little doubt that investing has become even more challenging, with self-directed investors feeling increasingly uncertain. ”

“The difference between doing it all yourself, versus being able to benefit from the extensive global resources, expertise, and experience of a world leader like BlackRock has been brought into sharp focus.”

Andrew Landman, Head of Australasia at BlackRock, said the firm is pleased to see its iShares Enhanced Strategic Model Portfolios available on the OpenInvest platform.

“Incepted in 2015, our iShares Enhanced Strategic Model Portfolios are designed to provide investors with exposure to broadly diversified portfolios in a cost-effective and transparent manner. As a firm, we continuously strive to create a better financial future for clients, and I’m excited to see a broader base of investors use our iShares Model Portfolios to achieve their long-term investment objectives.”

Varlamos further points to recent research that suggests SMSF trustees are facing an unprecedented hit as a result of the impacts of the COVID-19 pandemic on a wide range of businesses and industry sectors, and the likely reality of ultra-low interest rates for a long time to come.

“SMSF portfolios are heavily weighted towards what trustees thought were safe, big-dividend-paying stocks. Many such companies have not only been forced to suspend or dramatically cut dividends, but their share prices are significantly lower.”

“And, given negligible rates for safe investments such as term deposits, SMSF trustees need to be invested in broadly diversified portfolios, giving them exposure to the right mix of asset classes, in order to achieve their income and growth objectives,” he notes.

Research data consistently shows that portfolio diversification is precisely where investors say they need the most help.

For instance, the 2020 Investment Trends SMSF Report, released last month, found the number of SMSFs with unmet needs has increased from 315,000 in 2019 to 335,000 in 2020, with the most important unmet need being for help with their investment portfolios.

“One of the risks we’ve always felt that many self-directed investors, particularly SMSF trustees, face is a lack of proper diversification,” Varlamos explains.

“It’s not easy to get diversification right, even more so when you have limited information and therefore are more likely to lean toward your inherent biases, something we all have.”

“That’s why we think there’s no substitute for the expertise, considered analysis, and decision-making of professional asset managers.”

BlackRock, which manages over US$7 trillion in assets on behalf of investors worldwide, states its purpose as “to help more and more people experience financial well-being”, a mission shared by OpenInvest.

OpenInvest has been designed to facilitate the initial connection between investors and asset managers, and then to underpin the entire relationship.

“At the start, we’re a bit like a dating app for investors,” Varlamos says. “Investors can get to know the different asset managers – who they are, how they’re currently investing, what’s keeping them up at night, how much their portfolios cost – so they feel confident and empowered to choose one to assist them.”

After the initial ‘match’ is made, with an investor choosing a model portfolio from their preferred investment manager, OpenInvest continues to provide the support structure and the interfaces – including a dedicated investor portal and an app – and handles all of the trading and administration - with no brokerage fees.

BlackRock joins Schroders, SG Hiscock, and InvestSense in presenting themselves and their diversified model portfolios to investors via the OpenInvest marketplace, with a strong pipeline of top-tier asset management companies joining in the months ahead.

In other news released today, OpenInvest is pleased to announce the appointment of Mr Spiro Pappas as chairman, and the successful conclusion of its Series A funding round.

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