Historically, one of the main barriers to ETF adoption by the retail investor market in the UK has been the lack of ability to invest small amounts of money cost effectively. Investors and their advisers have only been able to buy whole shares in a single-company stock or exchange traded fund (ETF) on platforms. These shares cost specific monetary amounts, e.g. £43.78 per unit, making it tricky if the investor does not have enough money to purchase a whole share or prefers to invest a fixed sum like £100.
However, the introduction of fractional shares changes all this. Fractional shares allow investors to buy just a fraction of an ETF unit costing as little as one penny, rather than a whole share. As a result, fractional shares allow investors to allocate all of their money efficiently, in the same way as they have been able to do with Unit Trusts and OEICs. This is another example of how ETFs are revolutionising and democratising investing.
Technology is playing an increasing role in investing, making different products more accessible and easier to trade but also help inform investors when making investment decisions. For example, according to the BlackRock Investor Pulse survey, half of the UK population surveyed use online sources and websites when making long-term savings and investment decisions. This is the most frequently used source, with the bank the second most commonly used at 30 per cent. Not only are people using technology as a source of information for their investment decision making, but people are most likely to think about their finances when they are surfing the internet (27 per cent).
Overall, once relatively untouched by digitalisation, technology is playing a pivotal role in the evolution of the investment industry. With investors becoming increasingly focused on finding cost efficient solutions to help them achieve their end goal, technology is critical. Whether it be trading, advice or helping investors to make investment decisions, technology is and is set to remain critical for each of these areas.
