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Institutional Investment in Crypto: Top 10 Takeaways of 2019 – Coindesk

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This
post is part of CoinDesk’s 2019 Year in Review, a collection of 100+ op-eds,
interviews and takes on the state of blockchain and the world. Scott Army is
the founder and CEO of digital asset manager Vision Hill Group. The following
is a summary of the report:
An Institutional Take on the 2019/2020 Digital Asset Market”.

No. 1: There’s bitcoin, and then there’s everything else.

The
industry is currently segmented into two main categories: Bitcoin and
everything else. “Everything else” includes: Web3 innovation, Decentralized
Finance (“DeFi”), Decentralized Autonomous Organizations, smart contract
platforms, security tokens, digital identity, data privacy, gaming, enterprise
blockchain or distributed ledger technology, and much more.

Non-crypto natives are seldom aware that there are multiple blockchains. Bitcoin, by virtue of it being the first blockchain network brought into the mainstream and by being the largest digital asset by market capitalization, is often the first stop for many newcomers and likely will continue to be for the foreseeable future.

No. 2: Bitcoin is perhaps market beta, for now.

In traditional equity markets, beta is defined as a measure of volatility, or unsystematic risk an individual stock possesses relative to the systematic risk of the market as a whole.  The difficulty in defining “market beta” in a space like digital assets is that there is no consensus for a market proxy like the S&P 500 or Dow Jones.  Since the space is still very early in its development, and bitcoin has dominant market share (~68 percent at the time of writing), bitcoin is often viewed as the obvious choice for beta, despite the drawbacks of defining “market beta” as a single asset with idiosyncratic tendencies.

Bitcoin’s
size and its institutionalization (futures, options, custody, and clear
regulatory status as a commodity), have enabled it to be an attractive first
step for allocators looking to get exposure (both long and short) to the
digital asset market, suggesting that bitcoin is perhaps positioned to be digital
asset market beta, for now.

No. 3: Despite slow conversion, substantial progress was made on growing institutional investor interest in 2019.

Education,
education, education.  Blockchain
technology and digital assets represent an extraordinarily complex asset class
– one that requires a non-trivial time commitment to undergo a proper learning
curve. While handfuls of institutions have already started to invest in the
space, a very small amount of institutional capital has actually made it in
(relative to the broader institutional landscape), gauged by the size of the
asset class and the public market trading volumes. This has led many to
repeatedly ask: “when will the herd actually come?”

The reality is that
institutional investors are still learning – slowly getting comfortable – and
this process will continue to take time.  Despite educational progress through 2019, some
institutions are wondering if it’s too early to be investing in this space, and
whether they can potentially get involved in investing in digital assets in the
future and still generate positive returns, but in ways that are de-risked
relative to today.

Despite a few other
challenges imposed on larger institutional allocators with respect to investing
in digital assets, true believers inside these large organizations are
emerging, and the processes for forming a digital asset strategy are either
getting started or already underway. 

No. 4: Long simplicity, short complexity

Another trend we
observed emerge this year was a shift away from complexity and toward
simplicity. We saw significant growth in simple,
passive, low-cost structures to capture beta. With the lowest-friction investor
adoption focused on the largest liquid asset in the space – bitcoin – the
proliferation of single asset vehicles has increased.  These private vehicles are a result of
delayed approval of an official bitcoin ETF by the SEC.

In addition to the Grayscale
Bitcoin Trust
, other bitcoin-focused
products this year include the launch of Bakkt, the launch of Galaxy Digital’s two new
bitcoin funds
, Fidelity’s
bitcoin product rollout, TD Ameritrade’s bitcoin trading service on Nasdaq via its brokerage platform, 3iQ’s
recent favorable ruling for a bitcoin fund and Stone Ridge Asset Management’s recent SEC approval for its NYDIG Bitcoin Strategy Fund, based on cash-settled bitcoin
futures. 

We also observed a growing
institutional appetite for simpler hedge fund and venture fund structures. For
the last several years, many fundamental-focused crypto-native hedge funds
operated hybrid structures with the use of side-pockets that enabled a barbell
strategy approach to investing in both the public and private digital asset
markets.  These hedge funds tend to have
longer lock-up periods – typically two or three years – and low liquidity.
While this may be attractive from an opportunistic perspective, the reality is it’s
quite complicated from an institutional perspective for reporting purposes. 

No. 5: Active management’s been challenged, but differentiated sources of alpha are emerging.

For the year-to-date period ended Q3 2019, active managers were collectively up 30 percent on an absolute return basis according to our tracking of approximately 50 institutional-quality funds, compared to bitcoin being up 122 percent over the same time period. 

Bitcoin’s performance this year, particularly in Q2 2019, has made it clear that its parabolic ascents challenge the ability of active managers to outperform bitcoin during the windows they occur. Active managers generally need to justify the fees they charge investors by outperforming their benchmark(s), which are often beta proxies, yet at the same time they need to avoid imprudent risk behavior that can potentially have swift and sizable negative effects on their portfolios. 

Interestingly, active management performance from the beginning of 2018 consistently outperformed passively holding bitcoin (with the exception of “opportunistic” managers who also take advantage of yield and staking opportunities, as of May 2019). This is largely due to various risk management techniques used to mitigate the negative performance drawdowns experienced throughout the extended market sell-off in 2018.

Source: Vision Hill Group

Although 2019 has challenged the large-scale
success of these alpha strategies, they are nonetheless in the process of
proving themselves out through various market cycles, and we expect this to be
a growing theme in 2020.

No. 6: Token value accrual: Transitioning from subjective to objective

At the end of Q3 2019, according to dapp.com, there were 1,721 decentralized applications built on top of ethereum, with 604 of them actively used – more than any other blockchain. Ethereum also had 1.8 million total unique users, with just under 400,000 of them active – also more than any other blockchain. Yet, despite all this growing network activity, the value of ETH has remained largely flat throughout most of 2019 and is on track to end the year down approximately 10 percent at the time of writing (by comparison, BTC has nearly doubled in value over the same period). This begs the question: is ETH adequately capturing the economic value of the ethereum network’s activity, and DeFi in particular?

A new fundamental metric was introduced
earlier this year by Chris Burniske – the Network Value to Token
Value (“NVTV”) ratio – to ascertain whether the value of all assets anchored
into a platform can be greater than the value of the base platform’s asset.

The ETH NVTV ratio has steadily declined throughout the last few years. There are likely to be several reasons for this, but I think one theory summarizes it best: most applications and tokens built and issued atop ethereum may be parasitic. ETH token holders are paying for the security of all these applications and tokens, via the inflation rate that is currently given to the miners – dilution for ETH holders, but not for holders of ethereum-based tokens.

This is not a bullish or bearish
statement on ETH; rather it is an observation of early signs of network stack
value capture in the space.

No. 7: Money or not, software-powered collateral economies are here

Another trend we observed this year is a larger migration away from “cryptocurrencies” in an ideological currency (e.g., money/payment and a means of exchange) sense, and toward digital assets for financial applications and economic utility.  A form of economic utility that took the stage this year is the notion of software-powered collateral economies. People generally want to hold assets with disinflationary or deflationary supply curves, because part of their promise is that they should store value well.  Smart contracts enable us to program the characteristics of any asset, thus it is not irrational to assume that it’s only a matter of time until traditional collateral assets get digitized and put to economic use on blockchain networks. 

The
benefit of digital collateral is that it can be liquid and economically
productive in its nature while at the same time serving its primary purpose (to
collateralize another asset), yet without possessing the risks of traditional
rehypothecation. If assets can be allocated for multiple purposes
simultaneously, with the risks appropriately managed, we should see more
liquidity, lower cost of borrowing, and more effective allocation of capital in
ways the traditional world may not be able to compete with. 

No. 8: Network lifecycles: An established supply side meets a quiet but emerging demand side.

Supply side services in digital asset
networks are services provided by a third party to a decentralized network in
exchange for compensation allocated by that network. Examples include mining,
staking, validation, bonding, curation, node operation and more, done to help bootstrap
and grow these networks. Incentivizing the supply side is important in digital
assets to facilitate their growth early in their lifecycles, from initial fundraising
and distribution through the bootstrapping phase to eventual mainnet launches.

While there has been significant growth of this supply side of the equation in
2019 from funds, companies, and developers, the open question is how and when
demand for these services will pick up. Our view is that as developer
infrastructure continues to mature and activity begins to move “up the stack”
toward the application layer, more obvious manifestations of product-market fit
are likely to emerge with cleaner and simpler interfaces that will attract high
volumes of users in the process. In essence, it is important to build the
necessary infrastructure first (the supply side) to enable buy-in from the end
users of those services (the demand side).

No. 9:  We are in the late innings of the smart contract wars.

While ethereum leads the space on adoption and moves closer to executing on its scalability initiatives, dozens of smart contract competitors fundraised in the market throughout 2018 and 2019 in an attempt to dethrone ethereum.   A handful have formally launched their chains and operate in mainnet as of the end of 2019, while many others remain in testnet or have stalled in development.

What’s
been particularly interesting to observe is the accelerative pace of innovation
– not just technologically, but economically (incentive mechanisms) and
socially (community building) as well. 
We expect many more smart contract competitors operating privately as of
Q4 2019 to launch their mainnets in 2020. Thus, given the incoming magnitude of
publicly observable experimentations throughout 2020, if a smart contract
platform does not launch in 2020, it is likely to become disadvantageously
positioned relative to the rest of the landscape as it relates to capturing
substantial developer mindshare and future users and creating defensible
network effects.

No. 10: Product-market fit is coming, if not already here

We don’t think human and financial capital would have
continued pouring into the digital asset space in such great magnitude over the
last several years if there wasn’t a focus on solving at least one very clear
problem. The questionable sustainability of modern monetary theory is one of
them, and Ray Dalio of Bridgerwater Associates has been quite vocal about it. Big Tech centralization is another. There are also growing
global concerns related to data privacy and identity. And let’s not forget
cybersecurity. The list goes on. We are at the tip of the iceberg as it
relates to the products and applications blockchain technology enables, and mainstream users will come with growing
manifestations of product-market fit. As more time and attention gets spent on
diagnosing problems and working on solutions, the industry will begin to
achieve its full potential. Facebook’s Libra and
Twitter’s Bluesky initiative confirm that as an industry we are heading in the
right direction.  

A 2020 look ahead

We see 2020 shaping up to be one of the brightest years on record for the digital asset industry. To be clear, this is not a price forecast; if we exclusively measured the health of the industry from a fundamental progress perspective, by various accounts and measures we should have been in a raging bull market for the last two years, and that has not been the case. Rather, we expect 2020 to be a year of accelerated industry maturation.

Source: Vision Hill Group

Digital assets are still an emerging asset class with many quickly evolving narratives, trends, and investment strategies.  It is important to note, that not all strategies are suitable for all investors. The size of allocations to each category will and should vary depending on the specific allocator’s type, risk tolerance, return expectations, liquidity needs, time horizon and other factors. What is encouraging is that as the asset class continues to grow and mature, the opacity slowly dissipates and clearly defined frameworks for evaluation will continue to emerge. This will hopefully lead to more informed investment decisions across the space. The future is bright for 2020 and beyond.

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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US$1 trillion Asset Owner Platform launches solution for identifying SDG-investments – Canada NewsWire

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AMSTERDAM, July 6, 2020 /CNW/ – APG, AustralianSuper, British Columbia Investment Management Corporation (BCI) and PGGM have jointly established the Sustainable Development Investments Asset Owner Platform (SDI AOP). The platform’s standard and artificial-intelligence driven data enables investors to assess companies on their contribution to the UN Sustainable Development Goals (SDGs). The product will be available via distribution partner Qontigo.

Solving data challenges

Global investors increasingly consider the SDGs relevant to their investment strategy, policy, asset allocation, investment decisions and active ownership, according to research by the Principles for Responsible Investment (PRI). However, a lack of quality data to identify contributions to the SDGs has been an impediment for investors, and companies struggle to adapt their disclosures to meet investor needs. By providing a globally consistent SDG measurement framework, the SDI Asset Owner Platform helps investors to imbed the SDGs into their investment processes.

Shared understanding of Sustainable Development Investments (SDIs)

The SDI AOP allows asset owners and their managers to connect around the shared objective of measuring and understanding their portfolio investments’ contributions to the SDGs. These goals, set by the United Nations in 2015, aim for a better, more prosperous world, by addressing urgent global issues such as water scarcity, healthcare access, and protecting the environment. Investments in companies whose products or services contribute to the realization of the SDGs are called Sustainable Development Investments (SDIs).

AI-driven actionable insights

The SDI Asset Owner Platform provides a common definition, taxonomy, and data source for investments into the SDGs. Powered by AI-technology, data science company Entis generates SDI classifications for 8,000 companies to date. This enables investors to assess their global capital markets’ portfolios on their contribution to the SDGs and to report to their clients and external stakeholders transparently and consistently, using a common and auditable standard. The SDI classifications will be commercially available through Qontigo. The SDI definition and taxonomy are public and equally applicable to private market investments.

Asset-owner led platform

The SDI AOP is asset owner-led and asset owners make all methodological choices. The platform builds on the direct input and feedback from asset owners and their managers, and feeds the participating asset owners’ policy and investment needs into the assessment process. Subscribers and other stakeholders will also be invited to provide feedback. The SDI Asset Owner Platform will host a virtual event in September to provide interested investors with additional insight into the workings of the platform.

Commitment to the SDGs

The participating asset owners believe it is essential to invest into the SDGs, and to do so at scale. In September 2019, APG and PGGM, at the behest of their pension fund clients ABP, bpfBOUW and PFZW, announced their cooperation to set up the SDI Asset Owner Platform. These pension funds, among them the two largest in the Netherlands, have set ambitious targets for investing in the SDGs. AustralianSuper and British Columbia Investment Management Corporation (BCI) have since joined the platform. The SDI AOP welcomes investors across the globe to subscribe, creating a critical mass of investors who together define the meaning of investing in the SDGs.

Claudia Kruse, Managing Director Global Responsible Investment & Governance, APG

“The SDGs are global and launching this standard with asset owners from three continents shows our commitment to contribute to the SDGs, and we look forward to extending the collaboration. SDGs and AI-based technology are at the forefront of innovation. This investment is part of our commitment to our clients on whose behalf we invest in order to provide affordable pension in a sustainable world.”

Andrew Gray, Director ESG and Stewardship, AustralianSuper

“As a founding member of the SDI AOP, AustralianSuper strongly welcomes the opportunity to jointly establish a global standard for investors to identify sustainable development investments. The platform will progress how we assess and engage with investee companies on their SDG contribution, measurement and reporting. This will promote real world sustainable outcomes which are vital for creating long-term value for beneficiaries.”

Jennifer Coulson, Vice President ESG, BCI

“Standardization of data is one of the biggest challenges facing the environmental, social, and governance (ESG) landscape. For this reason, we are excited to be part of this asset-owner led initiative which sets a global standard on SDG contributions for all investors and brings consistency and comparability to company-level data. This is the type of quality data that BCI relies on when making investment decisions that are required to generate value-added returns for our clients.”

Eloy Lindeijer, Chief Investment Management, PGGM

“For PGGM this platform is an important next step in a process to mobilize ever more institutional capital around the big challenges of our time, as described in the SDGs. By collaborating with asset owners from different continents we hope that this SDI AOP will contribute to being a global standard for investors.”

Sebastian Ceria, Chief Executive Officer, Qontigo

“The application of transparent rules-based methodologies, common definitions, taxonomies and strong data are the bedrock elements required for effective sustainable investing. We are proud to be a part of the SDI Asset Owner Platform’s efforts to enhance the ability of investors to achieve their commendable goals in sustainable investing.”

Wim Scheper, Managing Director, Entis

“Contributing to the development of a global standard for SDG investments is truly inspiring. It will guide the decision-making by investors and companies towards a more sustainable world.”

About APG

APG is the largest pension delivery organization in the Netherlands; its approximately 3,000 employees provide executive consultancy, asset management, pension administration, pension communication and employer services. APG performs these services on behalf of (pension) funds and employers in the sectors of education, government, construction, cleaning and window cleaning, housing associations, energy and utility companies, sheltered employment organizations, and medical specialists. APG manages approximately €512 billion/ US$576 billion (April 2020) in pension assets for the pension funds in these sectors. APG works for approximately 21,000 employers, providing the pension for one in five families in the Netherlands (about 4.6 million participants). APG has offices in Amsterdam, Heerlen, Brussels, New York and Hong Kong. APG’s largest client, civil service and teachers fund ABP, has set the target to invest 20% of AUM into the SDGs by 2025.

More information: www.apg.nl/en

About AustralianSuper

AustralianSuper is a profit for member pension fund that invests the retirement savings of its 2.2 million members to help them achieve their best possible retirement outcome. AustralianSuper is Australia’s largest pension fund, managing €106.7 billion/US$118.7 billion in assets as at 31 May 2020. AustralianSuper manages the assets of one in every 10 working Australians, with more than 300,000 businesses making contributions on behalf of employees.

More information: www.australiansuper.com

About BCI

With C$171.3 billion of managed assets as of March 31, 2020, British Columbia Investment Management Corporation (BCI) is a leading provider of investment management services to British Columbia’s public sector and one of Canada’s largest asset managers. BCI generates the investment returns that help their institutional clients build a financially secure future. With a global outlook, BCI seeks investment opportunities that convert savings into productive capital that will meet their clients’ risk/return requirements over time. BCI invests across a range of asset classes: fixed income; mortgages; public and private equity; real estate; infrastructure; and renewable resources.

More information: www.bci.ca

About PGGM

PGGM is a cooperative Dutch pension fund service provider. Institutional clients are offered: asset management, pension fund management, policy advice and management support. On December 31, 2019 PGGM had €252 billion in assets under management and was administrating pensions of 4.4 million participants. Around 750,000 workers in the Dutch healthcare are connected to PGGM&CO, our members organization. Either alone or together with strategic partners, PGGM develops future solutions by linking together pension, care, housing and work.

https://www.pggm.nl/en/

About Qontigo

Qontigo is a financial intelligence innovator and a leader in the modernization of investment management, from risk to return. The combination of the group’s world-class indices and best-of-breed analytics, with its technological expertise and customer-driven innovation, enables its clients to achieve competitive advantage in a rapidly changing marketplace. Qontigo’s global client base includes the world’s largest financial products issuers, capital owners and asset managers. Created in 2019 through the combination of Axioma, DAX and STOXX, Qontigo is part of Deutsche Börse Group, headquartered in Eschborn with key locations in New York, Zug and London.

More information: www.qontigo.com

About Entis

Entis is a data science company specialized in unstructured text processing to create investable insights for asset managers. Using text documents such as annual reports, company webpages or patents, Entis classifies companies on their contribution to the UN SDGs. Entis furthermore provides services in the area of thematic investing and alpha research. Our service offering is enabled via our scalable data-platform and advanced pattern-recognition technologies.

More information: www.entis.ai

SOURCE British Columbia Investment Management Corporation (BCI)

For further information: and/or requests for interviews with Claudia Kruse, Managing Director Responsible Investment & Governance at APG, please contact: Dick Kors (media relations APG), Phone: +31 (0)6 34 02 07 51, E-mail: [email protected]

Related Links

www.bcimc.com

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No Time For Emotional Investing – Finance and Banking – Canada – Mondaq News Alerts

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Canada:

No Time For Emotional Investing

To print this article, all you need is to be registered or login on Mondaq.com.

If house prices dropped tomorrow would you sell? Probably
not.

A well-diversified investment portfolio is a lot like a solid
home in a good neighbourhood. It should be able to withstand ups
and downs over a long period of time. The big difference between a
home and a portfolio is that you can log in every day to track the
constantly changing value of your investments. Seeing a dip,
especially when markets are volatile, can trigger an emotional
response that leads to selling low, a counterintuitive
approach.

You may hear that other people are selling their investments or
choosing to park their money in cash until life returns to normal.
But if your investments are professionally managed, match your risk
profile, and put you on the right path to meeting your long-term
goals, sticking to your plan may be the best short- and long-term
approach.

7 Tips to stay focused on your financial plan

Here are some tips and strategies on dealing with your emotions
now and keeping your plan in place for tomorrow.

1. Don’t panic

Panic and anxiety almost always lead investors to make bad
decisions like selling good-quality investments at fire-sale
prices-only to buy them back later at much higher prices.

2. Get an objective view of your situation

This is not the time to call your day-trading buddy for stock
tips. Talk to friends and relatives who have endured times of
economic uncertainty. If your portfolio is professionally managed,
definitely ask your advisor for some perspective on dealing with
your emotional response to all that’s going on today.

3. Balance good and bad news stories

It’s essential to stay informed and know what’s expected
of you in extraordinary times. But dwelling on negative news can
eat away at your optimism. Seek solid, fact-based sources of
information and search out the good news. Lots of people and
organizations are doing the kind of positive work that will help
economies heal and markets recover. Balance your screen time with
these stories of hope and inspiration.

4. Keep saving money

If you are one of the lucky Canadians who is continuing to
receive a salary or other income, don’t let uncertainty derail
your good money-saving habits. If you are contributing regularly to
an investment plan, your contributions will benefit from
dollar-cost-averaging, a proven way to benefit from ups and downs,
while the markets remain unpredictable.

5. Stay committed to what works

Whether you manage your own investments or work with a
professional advisor, the decision to sell an investment should be
driven by your plan, not your emotions, and not as a reaction to
global events. Selling during a downturn locks in your losses and
forces you to choose an alternative investment that may or may not
perform as well when markets recover.

6. Stay protected

Cashing in or canceling your insurance policies is a
short-sighted strategy that can weaken the foundation of your
financial plan. If you need access to cash, talk to a professional
advisor about ways to create income from the assets you have in the
most cost-effective way. For example, you may be able to borrow
money using your assets as collateral. You’ll need to pay back
the loan but you can avoid cancelling policies at a bad time.

7. Spend within your means

Interest rates have dropped slightly and many assets are
undervalued right now. It can seem like the right time to trade in
your vehicle or make major purchases. But parting with cash or
taking on new monthly payments will have an impact on your cash
flow. If markets take their time recovering or interest rates start
to rise, financial security may be more important than a few new
things.

Get Your free financial plan

If the “new normal” has you feeling off-balance,
you’re not alone. Don’t let emotions guide your investment
decisions. I invite you to give me a call for a one-on-one review
of the markets and your portfolio. Then let’s work together to
develop a comprehensive financial plan that will help you achieve
your long-term goals. Some financial planners will charge upwards
of $3,000 to develop a plan. We’re happy to provide this
valuable service to our clients at no cost. –
Amardeep Sidhu (A.D. for short), Financial
Advisor

Originally published 26 April, 2020

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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Update On U.S. Main Street Lending Program

Torys LLP

Torys previously issued guidance and updates on the United States Federal Reserve’s three loan programs created under the Main Street Lending Program (MSLP) established by the Coronavirus Aid…

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Investment app Evarvest is teaching users the tricks of the trade – EuropeanCEO

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Investment app Evarvest is teaching users the tricks of the trade

The investment space is attractive to many, but is also full of pitfalls and unexpected financial costs. With her simple and accessible app, Evarvest, CEO Stephanie Brennan wants to make sure everyone has the tools they need to start trading

 

Ever since she overheard her parents discussing their own portfolios at the family dinner table, Stephanie Brennan has been interested in investing

Investing may be more appealing now than at any other point in history. Not only because stock markets around the world have been buoyant in recent times – the Dow Jones Industrial Average experienced its longest-ever bull run between 2009 and March 2020 – but also because low interest rates mean banks are not able to offer much for savers to get excited about.

But the investment world can also be a scary place; it is easy for the inexperienced to become overwhelmed. In the US, in addition to the Dow Jones index, there is the Nasdaq Composite and the S&P 500 to keep tabs on, as well as countless other smaller indices. If investors want to cast their net even wider, there is a whole world of other countries to invest in, each with their own myriad markets to consider. It’s a lot to take in.

The finance sector is heavily regulated, and entering it can take time – something that not all start-ups have the luxury of

Stephanie Brennan is working hard to make investing more accessible. As CEO of Vilnius-based start-up Evarvest, she believes it’s important to nurture the next generation of investors by providing education, support and the tools needed to invest in whatever assets pique their interest, wherever in the world they are based. The Evarvest stock-trading app makes entering the world of investing as simple as having a smartphone and a Wi-Fi connection, giving users the ability to trade more than 9,000 stocks at the touch of a button.

Declaring an interest
Ever since she overheard her parents discussing their own portfolios at the family dinner table, Brennan has been interested in investing. But the journey towards creating Evarvest has been gradual. One of Brennan’s early job roles was as a policy advisor for Australia’s regional government in New South Wales, assisting then MP Bronwyn Bishop in her role as shadow minister for seniors. Specifically, Brennan worked on legislative reforms in the superannuation space – the Australian equivalent of pensions – which gave her an insight into how investing affects older people and why so many struggle to acquire the financial liquidity and stability needed to support themselves during their retirement.

Her career then moved further into the investment space, first with property while working at real estate firm Richardson & Wrench, and then when she founded Step Wealth, a financial services firm that offered private wealth-planning advice. It wasn’t long before she was personally investing, both in property and the capital markets.

“The idea for Evarvest really came from my own experience,” Brennan told European CEO. “I was always really interested in the stock market, but I found it incredibly complex. That’s why I started with property, to begin with. But then I pivoted back to really wanting to get my head around investing in capital markets. I tried to self-educate, but soon realised that there’s a huge lack of advice and guidance in this space. While there are some great platforms that are really trying to educate people, I still felt like you needed a pre-existing level of understanding to engage with the concepts that they were explaining. It wasn’t simplified enough that I could come in with no experience and really grasp it.”

Brennan soon discovered that many others like her wanted to get involved in investing but didn’t know where to begin. After building up her knowledge base, she decided it was time to give back by sharing that information with others – it was then that Evarvest was born. Starting as a video blog in Australia in January 2018, Evarvest grew quickly. In June of that year, the company relocated to Vilnius, Lithuania, to obtain an EU brokerage licence. Partnerships, awards and funding rounds have followed, and today the company has a clear roadmap in place for further expansion.

Finding the funds
The challenge that Brennan had to overcome was greater than simply offering educational support in the field of investment: she found that the cost of getting involved in investing was prohibitive. When there’s also the risk factor to consider, it is easy to understand why high brokerage fees would lead many to simply leave their savings in the bank instead, even if the interest they are accruing is almost non-existent.

“I found that even if I was investing in my local market, it was still incredibly expensive to start investing,” Brennan said. “Most banks in Australia stipulated a minimum of AUD 500 (€294) per trade and about AUD 25 (€14.67) in brokerage. And from there when I wanted to access international markets, like the London Stock Exchange, it was AUD 20,000 (€11,740) to open an account with a stockbroker and AUD 200 (€117) in brokerage.”

With traditional investment platforms, users may be subject to a set-up charge, an annual fee, dealing costs, exit penalties and other expenses. Collectively, these can subtract significantly from any profits. With Evarvest, however, stock trading across US markets is commission-free, while all other markets are subject to a commission starting at just 0.1 percent. But low costs aren’t the only way Evarvest is trying to differentiate itself.

“What’s really unique about Evarvest is the way it brings all of those elements – accessibility, simplicity and cost – together,” Brennan said. “There are some great companies in our space that are really driving change, but if they are simple enough to use, then they often don’t have access to other markets. So I really wanted to bring everything together in one application.”

And while Evarvest is looking to appeal to a broad demographic, younger users are a growing market. Collectively, Millennials and Generation Z represent 63.5 percent of the world’s population, and these individuals are gaining financial power all the time. Improving their financial literacy is a good way of making sure this power doesn’t go to waste.

Return on investment
As with any start-up looking to disrupt a well-established industry, challenges are inevitable. Finding sources of funding is one obstacle that all company founders are aware of, but fortunately this hasn’t been much of a struggle for Evarvest. Last year, the firm exceeded its initial target in its first fundraising round by over 300 percent, raising €227,963, despite only targeting €75,000.

But while the company’s finances remain in good shape, there are many other hurdles to overcome. The finance sector is heavily regulated and entering it can take time – something that not all start-ups have the luxury of. With Evarvest, Brennan had to think carefully about where she wanted her business to be located based on the regulatory conditions within each market.

“Personally, I think every challenge is an opportunity in itself,” she said. “We started in Australia, but when we were looking to obtain a licence, we had to consider where offered the best return on investment, which led us to looking at different markets all over the world. We found that Lithuania has the fastest licensing time not just in the EU, but more broadly in the world. Normally, in the UK, most parts of Europe and Australia, the licensing time takes about 12 months, whereas Lithuania takes a maximum of six months in general. So for us, this market was hugely attractive, particularly as it gives us fantastic access to the rest of Europe. As a part of our Brexit strategy, we are also simultaneously applying to obtain our FCA approval in the UK.”

Evarvest shifted operations to Vilnius, Lithuania’s capital city, in June 2018, attracted by more than just the regulatory landscape. According to the Global Fintech Index 2020, Vilnius is ranked as the fourth-best location in the world for fintech, employing more than 21,000 technology specialists, 14,000 finance and insurance specialists and 2,400 fintech specialists.

Despite these advantages, Vilnius, like every other city in the developed world, has not been able to avoid the impact of the COVID-19 pandemic. Neither has Evarvest. Brennan is keen to stress that the likely long-term impact of the disease remains unknown, so her main goal has stayed the same – building a resilient business.

“I think in terms of COVID-19, we’re not really sure of the exact impact that it is going to have both in the short and long term, but – particularly in the capital markets – we are seeing a huge uptick in account openings for people looking to take advantage of any opportunities,” Brennan said. “There are some great companies that we use in our daily lives that have really dropped in value. Will these continue to be around in the next 12 months? Are they going to be able to ride out this volatility?”

When it comes to her own business, Brennan has long been prepared to expect the unexpected. “I often return to the wise words of my [mother], actually, when I started my first business,” she said. “She told me to always try to ensure that your company is effectively recession-proof; something that people always need no matter what.”

The volatility that the coronavirus crisis is bringing to the business world will see many firms plummet in value and others go under, but some will see their fortunes improve as consumer patterns and entire industries adapt. In this sort of environment, there will certainly be opportunities for investors to make sizable profits, and Evarvest is ready to give them a helping hand.

The share of responsibility
Leading a new business always comes with pressure, but it’s not often that a global pandemic is listed among the challenges. Brennan has tried to stick to her original timescales for expansion, while also staying true to her leadership style. The aim remains to launch in European markets first, before eventually expanding globally, back to Australia, then New Zealand and Canada, and finally Singapore and the US. Such expansion will require a significant amount of work, but Brennan knows this comes with the territory.

“I guess working for a start-up and having to wear multiple hats means that there is no typical day,” Brennan said. “Being the founder, it’s all about making sure that our marketing and our product aligns with the company’s overall strategy.”

At Evarvest, Brennan’s hands-on approach has ensured that the company has received accolades, funding and plenty of media attention. There remains much work to be done if the firm is to continue expanding and reach a global audience, but the CEO has shown already that she is willing to invest her time and energy into making trading available to everyone.

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