Raiz Invest Ltd (ASX: RZI) shares are shooting the moon today, rising 7.61% at the time of writing to 99 cents a share. The Raiz share price closed at 92 cents yesterday afternoon before opening at 93 cents this morning. The company’s shares then shot as high as $1.03 (a new 52-week high), before settling to their current price.
At 99 cents per share, Raiz Invest is valued at a market capitalisation of around $70 million.
It’s been a topsy-turvy year for the Raiz share price. It started out the year at 83 cents and climbed as high as 98 cents in February before the coronavirus-induced share market crash hit this company for six. Raiz shares fell almost 70% between 19 February and 23 March. However, they have also risen 230% between 23 March and today’s share price.
So what is Raiz? And why are the shares making new highs today?
Raiz-ing the stakes
Raiz is an investment company, one specifically targeting ‘millennials’ and young people. Its flagship product is the ‘Raiz’ app, which offers investing services, as well as superannuation.
These ‘investing services’ come in the form of facilitating easy investing into a variety of managed funds run by Raiz. Users can ‘set up’ a plan for periodic investing, such as ‘$5 a week’ or similar. They then choose from one of seven funds Raiz offers, and the investment is converted into units on behalf on the user.
Raiz also offers ’round-ups’, which allow a user to link a credit or debit card to their Raiz account, and have their transactions ’rounded-up’ to the nearest dollar, or another chosen threshold. The excess is then automatically invested in the user’s Raiz account.
ETFs on an app
The seven funds Raiz operates are graded on ‘risk tolerance’ and are mostly invested in underlying index exchange-traded funds (ETFs). They range from ‘conservative’ to ‘aggressive’, with intermediaries like ‘moderately conservative’ and ‘moderately aggressive’. Depending on the choice of fund, the cash will be allocated across a variety of assets. These include Australian shares, international shares, fixed-interest investments and cash.
For example, the Raiz ‘moderately aggressive’ portfolio allocates 43.6% to S&P/ASX 200 Index (ASX: XJO) shares, 13.8% to Asian shares, 6.4% to European shares, 8.9% to United States shares, 21.3% to corporate bonds, 3% to government bonds, and 3% to cash.
Raiz also offers two additional portfolios, the ’emerald’ portfolio and the ‘sapphire’ portfolio. The emerald portfolio has an ethical investing focus, whilst the sapphire portfolio is a hyper-aggressive option which includes a 5% allocation to the cryptocurrency bitcoin.
As we touched on earlier, Raiz also allows users to open a superannuation fund, which is operated in a similar manner to the investment platform.
All of this doesn’t come free, of course. Raiz doesn’t charge users with a zero balance. But once a user has money invested, Raiz takes a $2.50 a month fee on balances under $10,000, and a 0.275% per year fee on balances over $10,000.
Why is the Raiz share price raising the roof today?
Today’s breakout performance for the Raiz share price is most likely due to a monthly update the company released to the markets this morning. In this update, Raiz told investors it increased funds under management (FUM) by 10.6% to $581.34 million over November. Raiz had only surpassed $500 million in FUM for the first time in September.
Active customers in Australia grew 6.4% over the month to 233,477. That represents growth of 51.9% over the past 12 months. Investment accounts were up 6.3% in November to 437,116, an increase of 64.4% over the previous 12 months.
Active customers also grew by 17% to 56,699 in Indonesia, and by 34.8% to 27,787 in Malaysia as well.
Raiz CEO, George Lucas (not the Star Wars director!), had this to say on the numbers:
The growth in Funds under Management in November exceeded our forecasts… This was driven by a strong inflow of funds from existing customers and rising equity markets in November…
The focus over the coming months in Australia is to deliver a portfolio where our customers can choose their own asset allocation, as well as the addition of self-managed super funds (SMSFs), both of which should assist in increasing revenue per customer. In Southeast Asia, we are focused on customer acquisition, which after four months of being fully operational is very pleasing.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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