Acorns Grow sees Australia AUM grow to A$3 billion

09 November 2017   Category: News, Asia, Australia, Global, Malaysia, Indonesia   By Goh Thean Eu

US-headquartered Acorns Grow Ltd (Acorns Grow), which offers micro investment services to retail investors, expects its Australian unit’s assets under management (AUM) to jump more than 20-fold within the next three years, driven by a growing investor base.

George Lucas, Acorns Grow Australia's chief executive officer, says the company had AUM of about A$130 million (US$99 million) as at end-October 2017.

“In three years, we hope to have AUM of over A$2-3 billion. This will be partly driven by growth in active retail investors base, from about 127,000 investors to over 400,000 in three years,” Mr. Lucas tells Asia Asset Management on the sidelines of a digital finance conference hosted by Malaysia's Securities Commission (SC) on November 6.

Acorns Grow has developed a micro-investment app – called Acorns – that allows people to invest in exchange-traded funds using their “spare change". In Australia, the app can be paired with customers’ banking and credit card accounts, allowing it to accumulate spare change whenever customers make purchases.

Customers can also commit to recurring deposits of small amounts into the app.

“The take-up has been great. Bear in mind, our AUM as at end August were only A$100 million. Of course, we benefited significantly from the equities rally,” Mr. Lucas says.

Acorns Grow Australia is looking to expand its portfolio of investment products in order to boost its business. The company currently offers six portfolios of funds for investors: conservative, moderately conservative, moderate, moderately aggressive, aggressive, as well as an emerald portfolio that comprises environmental, socially responsible and corporate governance assets.

“The main difference between conservative and aggressive is the allocation of assets. For the aggressive portfolio, there is allocation for equities of as high as 85%,” Mr. Lucas says.

As for expansion plans, he discloses that Acorns Grow is currently studying the possibility and viability of expanding into the Southeast Asian market, particularly in Indonesia and Malaysia.

“We are still studying it, no final decisions have been made on when we will expand into these markets,” he adds.

According to Mr. Lucas, the company should not be viewed as a direct competitor to conventional asset management firms.

“In fact, I think we are complementary to their business. We are enabling a new generation to make investments. Of course, over the longer-term, the challenge will be retaining the investors as they mature, become more aware and educated about investments,” he points out.

SC Chairman Ranjit Ajit Singh is supportive of financial technology companies such as Acorns Grow.

“One of the core needs of millennial investors is the need for regular savings, even in small amounts, to be channelled towards investing for the future,” Mr. Singh tells reporters on the sidelines of the conference. “To incorporate regular investments into their daily lives, SC will be working with the industry to explore the innovative concept of 'spare change investments' in our market.”