Wise launches index investing in a bid to diversify earnings
- Published: 19th September 2021, 19:29
Wise has launched a new product – index investing. The fintech company, which was previously known as TransferWise, seeks to enable its customers convert cash into stocks. The new product will only be available to businesses and individuals within the United Kingdom at the beginning.
The feature, which is accessible via the firm’s app as a beta function, enables to switch from cash to stocks and vice versa. The beta trial will attract a fund fee of 0.15% per annum. After the trial, one will pay an annual service fee of 0.55%.
Speaking about the new product, Wise’s management has indicated, “Banks invest the money you hold with them to make money for themselves…we don’t think that’s fair. So we built Assets to let you choose how to hold your money.”
Wise was founded in 2010 as a cross-border payments provider. Over the years, it has expanded its services to about 80 countries across the globe. Notably, it has been recording profits since 2017.
In the current fiscal year, its profits doubled to $42.7 million as revenues surged by 39%. Besides, after going public on the London Stock Exchange via direct listing, it is valued at over $11 billion.
Other than being an international money transfer company, Wise has extended its tentacles to other areas such as cash cards and business accounts. Index investing will be its recent commercial entity.
The new area that Wise intends to venture into is one that is gaining popularity steadily. It is especially attractive to individuals who view the stock market as an intimidating or complex investment option. A typical index fund tracks benchmark indices such as S&P 500. Subsequently, it mirrors the index its tracking.
Wise’s decision to venture into index investing is a way of meeting the diverse need of its clients in the cross-border payments segment. Over the years, the firm’s customer base has grown steadily with more immigrants in developing and developed nations sending money back home.
Wise is now striving to create a solution for funds’ senders and recipients who are looking to increase their earnings. In its case, it will invest the clients’ funds in the iShares World Equity Index Fund, whose benchmark index is the MSCI World Index.
Are you in the process of sending money to another country? At MoneyTransfers, we can help you save money by showing you the transaction costs charged by hundreds of companies.
Crispus Nyaga is a full-time financial analyst and trader with more than 7 years in the industry. He has been fortunate to work for several fintech companies, mostly from Europe, Asia, and North America. His work is published in leading platforms like Seeking Alpha, Invezz, InvestingCube, Capital.com, and Marketwatch. Crispus operates from a private office in Nairobi.