Fractional Dealing: Making Investing More Accessible and Accurate
ETFmatic has been offering fractional dealing since April 2019. This means that the ETFmatic system is able to allocate 0.00001 EUR/GBP/USD worth of a share to its clients’ portfolios.
The topic of fractional investing is becoming more and more popular across Europe. However the majority of European investment platforms do not offer this feature to their clients. At ETFmatic, we believe it is fundamental in modern investing. Here’s why…
1. Invest in the best with less
Dealing in fractions of shares allows lower value portfolios access to higher priced assets, as well as the ability to achieve a diversified portfolio with less money. Whilst traditionally one would need to have invested at least 4k EUR/GBP/USD to have a portfolio that reflected his/her risk profile, our platform can do it from as little as 1 EUR/GBP/USD.
2. Portfolio / Risk profile maintenance
Ensuring that one’s portfolio remains in line with his/her risk profile has traditionally been a challenging and time consuming task available only to the wealthiest of private banking clients. ETFmatic’s state-of-the-art rebalancing technology and ability to deal in fractions of shares however further democratises finance, by enabling the masses to enjoy the fruits of a wealth management tool that automatically and regularly rebalances ones portfolio to accurately reflect his/her risk profile exactly.
3. Reinvest your dividends AND maintain your asset allocation
Furthermore, altering the ETFmatic system to accommodate fractional holdings majorly benefits retail investors for they are no longer forced to choose between reinvesting dividends and maintaining asset allocation. With a system capable of fractional dealing you can have both!
4. It has been possible with mutual funds for years
One of the few reasons for building a portfolio comprised of mutual funds was that investors could invest a set amount of money in the fund without worrying about the number of shares it amounted to. The fund would still take the amount of money even if it wasn’t evenly divisible by the share price therefore allowing you to own fractions of a share. At ETFmatic, ETFs now have that same benefit, which in most countries makes ETFs the best choice of instrument for medium-long term investments.
In conclusion, it was no easy feat adjusting our system to accommodate fractional dealing – in fact many have tried and failed! However for ETFmatic it was a straight-forward decision, for the benefits to the retail investor in mind far outweigh any associated costs.