Spaceship Voyager is an investment app.
It provides you with access to two managed funds, which directly invest in shares. One fund is largely invested in global technology businesses, as well as healthcare and consumer discretionary companies (like Amazon). The other is invested in big companies across industries. (An Index).
This means we manage your money for you.
One of the reasons people avoid investing in shares, is they don’t know which shares to pick.
Professional investors spend their days calculating precisely which companies are likely to make the most profits, and then allocating their money (or the bank’s money) into those companies via the share market.
The investors that do well strut around town, informing lesser mortals of their double digit investment returns, and the ones that do badly mumble quietly and glower.
These sophisticated investment professionals will always seek out an edge using data, computing power, relationships and years of experience while the rest of us kind of sit back and watch them make money.
But there are ways that we - people who spend their days doing literally everything else other than thinking about the share market - can get in on the money making.
And like most things in life, it’s by cooperating.
Once upon a time, if you had a bit of extra money, you might have engaged your broker (let's call him Greg) to give you investment advice.
Greg would scope out the available opportunities in the share market and talk shop with his investor mates, and build complicated models that would tell him to tell you that the Company XYZ share price is going to increase over time.
You would think about it a bit, be impressed by Greg’s modelling and then maybe agree to invest your money in Company XYZ. You and Greg would also settle on a fee for Greg’s complicated modelling and also work out how much of any gains Greg would take should shares in Company XYZ go up.
Greg’s price is usually pretty high because of, you know, the complicated modelling.
And Greg generally also had a rule that he wouldn’t get out of bed for less than a certain investment amount, which was generally also pretty high.
So if you had a smaller amount of money but still wanted to know if Company XYZ was going to go up, Greg would probably smile a bit and tell you to come back when you were richer.
If Greg turned out to be right about Company XYZ, as well as Company ABC, DEF, GHI and a bunch of other shares over a number of years he might decide he’s pretty good at this investing caper and set up his own managed fund.
A managed fund is where a group of people give someone (or a team) their money to invest on their behalf, because the group would rather do literally anything else other than worry about the sharemarket.
Greg - as the manager of the fund - would decide on a “pre-determined investment mandate” which is like a set of rules everyone agrees on.
These might be: we only like robotics companies or we don’t invest in coal companies or “we will return 3% more than the rest of the market, or so help us God”.
Then Greg would generally buy between twenty and thirty stocks and keep an eye on them. He would monitor things like the annual reports, information about each company and their customers, think about whether or not management was doing a good job and what their competitors were doing.
Managed funds like this are useful because they usually have a larger pool of money which allows the manager to buy in bulk (and save on the cost of transactions because of the sheer size of the orders). The pool also allows access to international shares (which is not always unique) but also perhaps shares of companies that haven’t even become public yet.
Everything in finance is kind of geared towards bigger numbers. The more money you’ve got to play with, the more avenues you can explore. Usually.
That’s why the cooperation of all the members who pool their money together can be quite powerful.
But of course, Greg isn’t going to manage all that money for free; he’s going to scoop a percentage fee of all the money under management and also receive a performance fee, if he’s right about the shares he’s picked.
And so folks like Greg can sometimes end up being extremely well paid. Warren Buffett started out as a Greg.
So that’s what a managed fund is!
Where lots of people pool their money together, and someone invests it on their behalf.
Spaceship is kind of like Greg, but with some key differences.
Like Greg, we have created managed funds (two actually), where you can put your money in with other investors and we will invest it on your behalf.
Except, unlike Greg, we will let you invest as little or as much as you like. We have no minimum on the amount of money you’d like to put in. It can be $5, $50, $500 or whatever.
That’s rather a unique thing in Australia because investing usually has a minimum investment amount.
The second difference is Spaceship will charge you a fraction of what Greg will, because we’ve basically automated a lot of his day to day job.
Exposure to hundreds of companies (as opposed to the thirty that Greg may have picked) means we are less susceptible to the performance of any individual one. We are leveraging the power of averages.
I’m now going to switch from Greg to Spaceship here and discuss what you’re actually buying.
A unit trust structure
To make sure a fund manager (either Greg or Spaceship) can keep track of the money pooled in the fund, the fund issues "units" in return.
These units are recognised by Australian trust law and are valid financial assets. They are also a neat way of calculating which portion of the fund belongs to you.
The amount of units you get depends on how much money you put into the fund and the unit price.
So, if the unit price is $1 and you put $1,000 into the fund, you’ll get 1,000 units.
The value of the unit (called the unit price) moves up and down depending on how the fund is performing.
If the fund performs well - and the share prices of the companies it’s invested in go up - then the unit price will reflect that and go up too.
If the unit price appreciates to $1.20, your 1,000 units are now worth $1,200.
The reverse will happen when the company share prices go down.
The value of the fund always reflects the value of all the assets held in that fund and is expressed in the unit price. (I.e. The total value of the portfolio divided by the number of units we’ve issued).
This unit structure method is really useful when you’re buying small lots.
Important! The unit price will not always go up. One of the risks of investing is that it’ll go down. But as economies grow and money circulates around businesses and people, more and more of it ends up in shares, which generally pushes the market higher over the long term.
Spaceship’s Voyager product is intended to encourage that kind of long term investment thinking, so you can build wealth in a way that isn’t overly intrusive.
Some folks who don’t need $5, or $50, or $500 to live their life right now, are putting it in the fund, getting some units, and forgetting about it for a while.
Investing can help you build wealth to achieve your financial goals in the future.
Or some folks are considering setting up a weekly investment plan of $5, get some units every week, and forget about it for a while.
The real underlying point of this app is to make investing a habit.
And rather than having all your money sit as a lump sum in your bank account, your spare cash could be invested in the sharemarket, which generally grows in value over time.
In response to that, Spaceship designed this app as a way for people to make investing their money a habit.
It really doesn't have to be much.
Australia’s fantastic superannuation system is based off a regular investment model: 9.5% of your salary is withheld every cycle and is invested on your behalf.
Because that money vanishes before it even lands in your hot little hands, it’s very rare that you’ll miss it. Yet it makes a huge difference to your quality of life when you retire.
If you can set up a similar system for your investment goals, where a portion of your income vanishes before you even see it, you’d be surprised at how quickly you can build a handy stash of money.
Having a backstop of extra money can be powerful; it can give you some breathing space if you’d like to retrain and look for another job, it can help give you opportunities to move about the world and learn more, it could contribute towards a house for you and a family you might like to have, and it can also help protect you if something happens to your health.
I don’t really need to bang on about this.
You know having extra money is helpful, but you also probably know it’s really difficult to actually save and people get stuck living week to week or burdened with poisonous credit card debt.
Voyager is a tool to build a pool of your money which leverages the power of the share market.
We’ve designed it so you don’t have to educate yourself as a stock-picking investor (unless you’d like to).
Greg can stick to the day-to-day research, you can go and do literally anything else.
Now let’s talk about the actual share buying part.
Remember, Spaceship takes the money you’ve swapped for units and then uses that money to buy shares in global and Australian companies.
I’ve written a post on exactly how shares and share markets operate here, if you’re interested.
You can decide to get units in two Spaceship managed funds: Spaceship Universe Portfolio (yes, yes, sounds very startup) and Spaceship Index Portfolio.
Voyager is the name of the app you use to set up your investments, check your balance and understand which shares the fund owns.
It’s not a platform where you can actually choose the shares themselves.
For the Universe Portfolio, we have chosen 100 international and Australian companies, with a focus on technology businesses.
The proliferation of software and the powerful evolution of the internet and its role in modern business forms the basis of our investment methodology.
We are investing where the world is going. The largest companies in the world now are the Googles and the Amazons and the Alibabas and the Netflixes, and most businesses are adapting their models to include deep technological processes.
We have included all of these businesses and 96 more in the portfolio.
The great thing is, by holding units you are like a fractional owner of all of the assets of the portfolio so you get an exposure to these companies. Mathematics is really brilliant like that.
You can view every single company (each with an individual explainer on what the company does and why we like it) in the Spaceship Voyager app or on our website. If you have a spare hundred hours, maybe give them a read. (We’ve explained them out in plain English, like this post).
As these companies grow and evolve, we think their share prices will go up over time and increase the value of the Universe Portfolio. Which means the unit price may rise and the value of your portfolio could increase.
Important! Financial markets move around and sometimes there is a selloff or other event impact share prices. When that happens, share prices go down and the unit price may fall.
Voyager is designed as a habitual investment app, so you can just add little blocks of units over time but sometimes your unit values will decrease. We take a long term view to investing and think market volatility should be ridden out.
As I describe in this massive “the new-to-investing story” post, sometimes individual businesses perform badly and their share prices might fall.
Don’t stress about this overly; there are so many companies in the Spaceship funds, that the loss in one company will have a muted impact on the overall performance. We have deliberately made our exposure so broad that we are leveraging the entire lot.
That also means when one company does blisteringly well, that will also have a muted effect on the whole portfolio. This is a slow and steady journey.
I’ve also written a step-by-step guide about how we select and weight different technology companies.
Have a read of our investment process here. (And check out the “why we like it” sections of each company in the Voyager app).
The second fund, the Index Portfolio, is not an actively managed fund like the Universe Portfolio.
Whereas Universe is home to global and local technology businesses, Index is home to big businesses in general.
Index includes 100 of some of the largest Australian and 100 of the largest international companies, irrespective of which sector they operate in.
This includes the likes of Australia’s big four banks, the big miners, as well as Coca-Cola, General Electric and McDonald’s.
These companies are established and are growing more slowly than the companies in Universe, but because they are so established, they generally don’t suffer the same share price moves as growing technology companies.
The whole design of the Spaceship Voyager app is to provide you with an opportunity to invest in the sharemarket without having to pick individual companies; that’s for folks like Greg.
What Greg does, in terms of researching and selecting specific companies to include in his fund, is his full time job.
So he’s going to charge you when the fund performs well, that’s called a performance fee.
And because he’s made sure you understand he might not always pick a winner, he’s still going to charge you a management fee (which is generally a percentage of all the money he manages).
Spaceship is a tech company trying to get as much money under management as possible so it has as much buying power as possible to deliver competitive pricing to you, the customer.
Meaning we want as many users as possible to add as much money as they like, so we can introduce new features and build new financial products to help our generation's money become more money.
And because we’ve invested in so many different companies, we’ve spread the risk quite broadly.
And while we carefully monitor and have guidelines about what we are comfortable investing in, we are extremely long term investors so we don’t rejig the portfolio unless we really think the company is not going to return value or there is a shift in the industry.
Because we don’t rejig nearly as much as Greg does, and we're focused on making this accessible to younger people, we can be a lot cheaper.
For any balance under $5,000 in Universe Portfolio, we won’t charge you anything.
For any balance over $5,000 in the Universe Portfolio, we will charge you 0.10% per year. (So for example, if you have $10,000 invested we will charge you $5.00 per year).
In the Index Portfolio, it’s a similar deal.
For any balance under $5,000 in the Index Portfolio, it’s fee-free and for any balance over $5,000, we will charge you 0.05% per year. (For a $10,000 balance in Index, it will cost you $2.50 a year to stay invested).
So much of finance can be difficult to understand.
So even super bright people baulk at language like “consolidated debt obligations” or “put options” or “credit default swaps.”
Aside from our two funds, we’re committed to providing a steady stream of clear information around investing habits, techniques and strategies to adapt your way of thinking and a news flow so you’re generally aware of what’s happening to the companies in your portfolios.
This whole Spaceship caper is based on the premise that young people should have an easy way to have exposure to the sharemarket.
So we built two, really affordable managed funds.
For one fund, we've picked shares that are set to grow steadily through the next phase of technological evolution. The other fund? We’ve captured the market by investing in some of the largest companies in Australia and the world, and we figured it would be helpful to allow you to invest as little as you like.
This is all about exposure and simplicity.
Apologies for the billion words, but we figured it was worth explaining out.