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February 25, 2022

Re-thinking the investment experience

Hear from our friend Georgia at Tumelo on how we are paving the way for a future where all investors know what is inside a fund before they invest.

Written for The Big Exchange by Georgia Stewart, CEO and co-founder of Tumelo which launched in 2018 with a mission to help every investor have positive impact.

What is a fund and what's in it?

A fund is a mysterious thing. What does it mean to purchase a fund, and what's in it? Most fund managers only publish the top 10 largest holdings of their funds. These holdings could make less than 5% of the total fund. The Big Exchange has made a commitment to work with fund managers who reveal all of their fund holdings, not just the top 10. Tumelo works in partnership with the Big Exchange to make this possible by using our API technology which plugs into the Big Exchange's platform. 

The importance of knowing what you're eating

People need transparency to know what they are buying. It's been 50 years since the Food and Drug Administration (FDA) published the first regulations requiring the nutritional labelling of foods. The FDA acknowledged the importance of people knowing what they are consuming before they made a purchase. Another example is synthetic fabrics which weren't invented until the 1960s. Manufacturers were keen on making sure consumers knew the exact percentage blend used in the clothing. Labels on clothing then became required in the early 1970s so consumers could know exactly what the clothes they bought were actually made of. 

And yet people's investments, which many depend on for their retirement, their children's education fees, paying off their mortgage etc., remains opaque. As a result, many people don't know what companies are inside a fund, from fast-food chains to social media giants. At Tumelo our user feedback demonstrates that many investors feel a sense of relief when given investment transparency, as they appreciate the sheer diversification of their investments. Our user testing also shows that transparency serves as an educational tool for investors, enabling them to understand how the funds they invest in are made up of various companies which they can explore for themselves. As "ESG" becomes increasingly popular, investors have started to look into how ethical or sustainable their investments are. It's no longer sufficient to brand an investment fund 'ESG' or 'Green', there is now the expectation to disclose the funds' investments so investors can feel confident about where their money is ending up. 

Re-thinking the typical investment experience

By re-thinking the typical investment experience and considering how best an investor might consume information, we can change how much they understand about investing and significantly improve the experience. Making this information easily accessible and turning it into something that anyone can understand (rather than just an investment professional) leads to significantly better outcomes for investors. 

Using this technology investors can now understand what it means to invest in a fund, the value add that a fund manager brings and the concept of diversification. What's truly exciting is that investors now have the information they need to make better decisions about their finances and ultimately, take action. Investors can take action by ensuring their investments are in funds that reflect their values. They can also communicate their values to their fund managers so they can make more informed stewardship decisions when they cast proxy votes, for example. 

By bringing transparency to investing, The Big Exchange and Tumelo's partnership is helping investors drive demand with their money, further democratising capital and helping hold the finance industry more to account. The Big Exchange was the first digital platform of actively-managed funds to give investors the most amount of transparency in their investments using available technology. 

Working together for better transparency

The Big Exchange, their asset manager partners and Tumelo are proud to be working towards creating a level playing field to allow retail investors to see what is behind the funds they choose to invest in. Together we are paving the way for a future where all investors know what is inside a fund before they invest and can track how that changes over time. A future where investors have a voice on how the companies they're invested in behave and understand that they are shareholders and stewards of these companies for future generations. 

Please remember that when investing, making money is not guaranteed and your capital is at risk. The value of your fund can go down as well as up. Tax treatment depends on an individual’s circumstances and may be subject to change.

The Big Exchange (TBF) Limited is a wholly-owned subsidiary of The Big Exchange Limited. The Big Exchange (TBF) Limited is an Appointed Representative of Resolution Compliance Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 574048). (6735)