eToro's commission-free stock offering to attract a new generation of Australian investors

eToro's commission-free stock offering to attract a new generation of Australian investors

Earlier this month eToro launched its commission-free stock offering into Australia, giving users of the investment platform access to stocks listed on the NASDAQ and NYSE exchanges.

This long-awaited expansion into Australia sees the app become a bona fide global broker of zero-commission stocks, with the product now available in over 100 countries.

Since expanding into the region, Australia has become one of eToro's fast-growing markets, with over 510 per cent increase in new investors since the beginning of this year, with Australian investors accounting for 13 per cent of the platform's investors from the Asia Pacific region.

The platform announced it now has 13 million registered users globally as more people seek to gain access to financial markets worldwide. eToro saw an increase of 427 per cent in new users globally making their first deposit on the platform in the first 4 months of 2020, compared with the same period last year.

Business News Australia spoke with Robert Francis (pictured), managing director Australia at eToro, about the launch of its commission-free stocks offering in Australia, how COVID-19 has inspired new investors to jump on the platform, and how the company has grown in the cryptocurrency arena.

Why is eToro's new commission-free stocks offering product a game changer in Australia?

eToro was founded with the goal of opening global markets for everyone to trade and invest in a simple and transparent way.

This is part of our campaign to not only encourage people in Australia to start investing, but to get them passionate about it as well.

By going commission-free on the most popular stocks on the eToro platform (stocks listed on the NASDAQ and NYSE exchanges) we are removing one of the main barriers to investing, which is cost.

eToro offers fractional shares, meaning investors can invest in their favourite stocks with as little as USD $50.

For example a share in Amazon is roughly USD $2500 (AUD $3800), however, with fractional investing, Aussies can purchase as little as 0.001% of an Amazon share.

Using this approach, every-day Australians are able to build a strong portfolio of stocks like Netflix, Tesla, Facebook, and more, without having to invest large amounts of capital.

The product was very successful in Europe and the UK when it was launched in those jurisdictions last year. Do you expect a similar result in Australia?

Yes definitely. Investing has traditionally been quite difficult for regular people and their access to global financial markets has been relatively limited.

Many Australians think they don't have enough money to invest. eToro is trying to change this mindset and make it easy for Australians to invest in companies they care about.

How has this new product been received so far since you launched it here?

The announcement has been met with a lot of excitement from users and partners alike.

US stocks represent around 80% of stocks traded on eToro globally and there's a growing interest from Australians (especially those who fall into the millennial demographic) in American companies who have become household names.

If eToro isn't taking a commission what benefit does the product have for the company?

eToro has been in business for 13 years and is proud to provide access to global markets to clients in over 100 countries.

Offering zero-commission stocks is one way we are able to extend value to eToro users around the world and in new markets like Australia. It builds on our vision to open the global markets to everyone.

13 million global users is not insignificant in the slightest - it must be exciting to have reached this massive user base. How does the company plan on attracting the next 13 million users?

At eToro, we want to encourage more people to start investing and growing their wealth.

One way to do this is to lower barriers to investing, hence our new commission-free offering on NASDAQ & NYSE stocks.

The second is enabling access to financial education so more people can understand the value of investing and how to approach it.

The social aspect of eToro, our unique 'copy' functionality means that eToro is well suited to new investors wanting to learn and take their first steps.

We're in the middle of the COVID-19 economic crisis which has implications for markets globally; how has this impacted eToro? Are you seeing less invested through the platform or are investors taking advantage of the moment?

The market volatility caused by COVID-19 has highlighted the investment opportunities in mainstream news and consequently, generated more public awareness.

As a result, we have seen more people come to eToro to learn and invest, particularly amongst young people.

This demographic sees opportunity in companies that are at the forefront of change, particularly in the realm of technology and there is an increasing appetite to participate.

With stock prices falling rapidly, investors are viewing this as a good opportunity to enter the market with less capital, especially because eToro enables them to buy fractional shares.

While a lot of the market has experienced a decline, some areas are climbing and delivering returns.

Stocks in the healthcare sector, technology powering the work-from-home movement, FMCG manufacturers, video games, and home entertainment platforms have been popular amongst investors.

What have been some of the highest performing positions on eToro during this crisis?

In April, some of the most popular stocks on the eToro platform have included Amazon, Microsoft, Netflix and Tesla.

US tech companies are amongst the most popular stocks on eToro both in Australia and globally.

Facebook, Netflix, and Amazon reached all-time highs during the COVID-19 crisis.

People have gravitated to stocks that have strong cash flows and will grow during both good and bad times.

In addition to traditional investments into stocks eToro also gives users the option to acquire positions in commodities and cryptocurrencies. I am interested in what percentage of users use the platform for traditional positions vs less traditional options like crypto and commodities?

eToro has built a great standing in the cryptoasset space, however as the platform has grown, we've diversified our offering to meet the requests of our users.

eToro is a multi-asset investment platform, offering investors the opportunity to build a portfolio of stocks, commodities, indices, currencies, and ETFs, as well as cryptoassets.

Stocks, such as those listed on the NYSE and NASDAQ are amongst the most popular on eToro. In the first quarter of 2020, stocks trading tripled on the platform globally compared to the last quarter of 2019, highlighting the increasing demand for exposure to this asset class from our 13 million users around the world.

One of the most exciting parts of eToro, in my opinion, is the social aspect. Why was that introduced and how can investors make best use of that element of the platform?

When the Assia brothers co-founded the platform they wanted to make the concept of investing more social.

The social aspect of eToro is what differentiates it from other platforms in the market.

Instead of just trading stocks, eToro allows investors to join a global community (similar to how people use Twitter or Facebook) to discuss their strategies and make investments on a user-friendly platform.

Another unique feature of eToro is users' ability to copy other investors, which is particularly useful for newcomers who are still learning the ropes.

The copy function is a popular way for new users to participate in the market by mirroring the investments that experienced investors make.

We encourage our clients to interact with each other and share ideas because, at the end of the day we believe a community that is educated, is a better investing community.

Launching the zero-commission stocks offering in Australia is a huge milestone - what are your future plans for the region?

Australia is a key market for eToro. With interest rates expected to remain low for the foreseeable future, Australians are looking at the current economic climate as an opportunity to build their wealth. 

More people are realising that by adopting a long-term investment strategy, they can often generate better returns than they could expect by having their money sit in a bank account.

With this in mind, we're looking at how we can continue to create opportunities and value for Australian investors.

In the future, we'll be exploring how we can expand our offering in the local market, as well as introduce new products and services that will enable Australians to build their wealth and get more out of their eToro account.

This article was written in partnership with eToro.


This announcement promotes stocks traded on US stock exchanges and is of a general nature only.  Stocks are offered through eToro Service (ARSN 637 489 466) operated by Gleneagle Asset Management Limited ABN 29 103 162 278, AFSL 226199, and promoted by eToro Australia Pty Ltd. CAR 001281634. All other stocks are offered on an OTC derivatives basis, bear commission and are provided by eToro AUS Capital Pty Ltd.

The information has been prepared without taking your objectives, financial situation, or needs into account.  You should obtain your own advice in light of your own objectives, financial situation or needs and refer to our FSG and PDS  before deciding whether to trade with us. Trading stocks may not be suitable for all investors. Your capital is at risk.

Zero-commission does not apply to short or leveraged positions. Zero-commission means that no broker fee will be charged when opening or closing the position. Other fees may apply. For additional information regarding fees, click here.

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