Gumtree Founder To Spark Robo-Advisor Investment Price War

One of the UK’s most successful entrepreneurs over the early years of the digital economy is launching a new robo-advisory investment platform. And its flat-fee structure could be set to spark a price war for the business of its target market investor profile. Simon Crookall, co-founder of online classifieds site Gumtree, is one of two co-founders behind InvestEngine, a new robo-advisor investment platform that launched today.

InvestEngine’s other co-founder is Joanna Crookall, the 52-year old’s sister. Joanna’s background is running Ramsey Crookall, the Isle of Man-based investment manager and stockbroker founded by the brother and sister’s grandfather in 1946.

Simon Crookall sold Gumtree to eBay in 2005. The exact sales price was never made public but eBay did publish $86.1 million as the overall sum paid for three classifieds sites, of which Gumtree was by far the biggest. Crookall subsequently co-founded Slando, a similar site to Gumtree targeting the East European market. Slando was subsequently sold on to South African internet and media group Naspers.

Crookall certainly has pedigree when it comes to making a success of online-only businesses and will be confident in the new partnership, which aligns his strengths with his sister’s investment market nous.

Robo-advisor investment platforms have sprung up over the past several years as a half-way house between often expensive actively managed funds and passive index trackers. They use algorithms rather than human analysts and fund managers to put together a diversified investment portfolio. Investors fill in a questionnaire covering questions such as their degree of risk tolerance, how much they are able to invest each month and the length of their investment horizon.

Based on this personal information and preferences, the robo-advisor matches the investor to one of several ‘off the shelf’ portfolios its algorithms have put together. The make-up of these portfolios are also occasionally adjusted by the robo-advisor’s algorithms to reflect changing market conditions, in a similar way to the approach a human fund managed would be expected to take.

InvestEngine’s ‘USP’ is that it will charge a flat fee of 0.45% regardless of the value of the investor’s portfolio, which should have a minimum starting level of £2000. The new robo-advisor also won’t charge any other fees, including exit penalties. The other major platforms in the robo-advisory sector, such as Nutmeg, Wealthify and MoneyFarm, have tiered or sliding scale fees that InvestEngine will undercut.

Source: The Times

InvestEngine’s portfolios will all be built from ETFs and will also all contain at least some exposure to gold as a stabiliser, across all risk profiles, the most aggressive of which has a 95% allocation to equities. The focus of the portfolios will also be global rather than UK-centric.

Despite the fact that robo-advisor platforms have proven most popular with millennial investors, Crookall has stated that InvestEngine’s target market won’t be a particularly young one. Rather, the new platform believes it will appeal most to “savvy investors who are frustrated with high fees and poorer performance”.