I was initially pretty skeptical though – what use is another portfolio manager when you can do things pretty simply yourself, or with the likes of Yahoo?
So first let’s look at Yahoo. They let you construct a portfolio (or as many as you like) using share data from a whole bunch of exchanges – not just Australia and NZ. Here they are:
I set up a fake portfolio for Australia/NZ in about 3 minutes. It lets you enter in the date that you acquired the shares, and will calculate the total return for you. You do need to remember how much you paid for it though.
You can create your own view of your portfolio, and, of course, plonk it on your myYahoo home page – handy if you use Yahoo mail. Pretty nice – and free, but old school.
Google‘s offering is stunning. Not only is coverage of NZ (and Au) shares now there, but it is a much more web 2.0 application – dead simple to use.
From an investor point of view – i.e. “how are the companies that I invest in doing?” the tools are excellent – with fantastic news sitting beneath flexible and comprehensive portfolios.
you can switch the portfolio view very easily – here a fundamentals view:
You can add in transactions (with dates) and track overall performance on you iGoogle homepage – which, unlike Yahoo!, I actually use.
It doesn’t seem to bring in historical dividends, and doesn’t track options, but watch this space – Google moves fast. Overall I’m gushing – but really this is a lot better than ladt time I saw it, and perhaps even better than my own etrade account.
Best thing – Google tracks when earnings releases arrive, and you can add them to your google calendar. How simple!
eTrade (US version) lets me track stocks across 5 different countries - NZ (or even Australia) is not one of them. eTrade shows me my portfolio, including options, with market values and different views. Additionally they have plenty of tools to track performance, though they could be better as I don’t get credit for timing my moves in and out of the market. It’s also a US-centric website, and as such everything is based on the US tax year – which is the calendar year. Running my NZ tax this year is going to be entertaining – though I can easily export my eTrade Transactions to excel and go from there.
And that’s where Sharesight has a market. It’s a great way to handle working out your NZ capital gains tax on your investments in Australia and NZ.
Overall the website looks entertainingly useful and fun. Plomk in your purhcase dates and amounts, and Sharesight calculates all the splits, dividends, tax credits and the like to give you an overall portfolio return.
However – it is not all that useful yet for investors that invest in other lands – and we all should be doing so to have a diversified portfolio. There is space of course for sharesight to expand to accept transactions and calculate tax liability from other markets. So when Sharesight brings in foreign (US) stocks I’d be keen to give it a go.
But not at the current fees.
At the current fees I’d simply sign up for a month at the ned of each tax year, work out the tax and then get out straight after. There seems to be no benefit (and certainly a cost) from using Sharesight for day to day management versus either Google or your own online share broker.
Moreover the fees are tiered, and those top tiers are brutal, and kick in at very low usefulness Who owns less than 5 shares? who doesn’t want a tax report?
I’d chop them up and make a single tier, give an annual fee option along with the monthly one and forget about charging $39 for stuff that is “coming soon”. I also believe that the appetite for fees is much lower than portrayed. I’d be going along the lines of $10 or $20 per year, $50 at a stretch.
That’s the other pain – I wish that Google and eTrade could play together so that my transactions could be imorted from eTrade to Google. Similarly Sharesight is hopefully working on one click importing of whatever the local online share trading houses export. I have only a few stocks, but for someone with s portfolio of 20-30 stocks, purchased at differnt times, it would be a real pain to enter them all in. Of course it would be even more pain to work out the tax without Sharesight.
The business case
So overall if I had an NZ portfolio of stocks I’d probably use Sharelight next month on the 30 day free trial to calculate my tax liability – and then not sign up. I believe that the pricing structure is all wrong – a yearly fee is better, and it should be around $20.
However the market is pretty small. The number of people in New Zealand that want to manage a portfolio would be a percentage of the number of people that go to financial sites. There were about 31000 UB’s at directbroking, 22,500 at interest.co,nz and a paltry 15,000 odd at sharechat.co.nzduring February. I’m assuming naively that The directbroking customers have some sort of tracking tool, but that it isn’t great and so a percentage of people will come over. Let’s be wildly generous and say 10% come over. That’s 3,000 people.
The sharesight blog implies there are 730,000 shareholders in NZ. That’s a bunch, but most of those would be passive, suing someone else to manage their portfolio, or dead (literally). The Sharesight service is aimed at more active and engaged traders. So let’s say they can get 5% of the overall shareholders in NZ – that’s about 35,000 people.
ok – so from 3,000 to 30,000 people at, for me, a fair price of $20 per year – that’s $60,000 to $600,000 per year.
If you believe in the $20 per month model, then multiply that by twelve to transform that $20 per year to $20 per month, and we get $720,000 to $7.2m in annual revenue. That upside would be much much lower at that sort of pricing – so my range would be more like $60,000 to $1m per year in the first years.
That has to support 4 owners/directors/principals and an outsourced interaction/ development firm. That’s means not a lot of custard to start. Launching into a massive bear market isn’t going to help – people trade a lot less when the market is falling.
What’s the upside?
Firstly, and obviously, it’s around getting more customers – either Kiwis with overseas portfolios, or overseas folk. The second one is tough, as Google is tough to compete against. More customers means more subscription income, and this is an easily scaled business.
Secondly, with their great usability I’d sign up very quickly if they extended into being an online broker – allowing me to trade shares. that’s a different busines model, but they’d take a chunk of the market pretty quickly.
Thirdly – there’s an obvious exit to a broker or to an internet business media player.
Finally – there is something about Sharesight being a custodial system. National bank are about to start changing a staggering 1% of portfolio value for “Custody fees”. That’s a significant amount, and if Sharesight can bring people over then it is game over. They seem to think they can, but they need to really spell it out for people in single syllable words.
Well done guys – lovely execution, a business model with potential and some good PR to kick things along. Fix the pricing though.