This article began as a paid review of the Spaceship Voyager app-based investing platform, but then Spaceship didn’t approve it for publication, so I gave up on the original article. Here’s the story of that review, along with relevant excerpts from it, intended as a guide for anyone considering investing in it.
If the name Spaceship rings a bell, it might be because of the controversy surrounding their superannuation fund, which got fined for false advertising recently. Voyager is separate from the super fund, and it provides two simple investment options: the Index portfolio and the Universe portfolio, which are essentially passive and actively managed funds, respectively.
The two portfolios are simple enough. Both portfolios track indexes built and maintained in-house by Spaceship. The Index fund includes the 100 largest Australian companies, and the 100 largest international companies, measured by market capitalisation. The Universe portfolio’s index includes 100 companies actively chosen by Spaceship’s investment managers.
Immediately after I published my article about Vanguard’s ownership structure back in July, Spaceship tried to post a comment spruiking their Voyager app in reply to my article. I blocked the comment, because I didn’t want spam on my site. They tried again a couple of hours later, and I blocked it again, so it never appeared publicly. Then they sent me an email offering me $250 to write an independent review. I was sceptical, but I went back to them to confirm that “independent” meant that I was free to write my honest opinion. They confirmed that I was free to write whatever I wanted, warts and all. So I dived into their PDS and the iPhone app and spent a few weeks researching Voyager inside and out. I liked some things about it, and also had a few concerns, all of which I wrote into my review. Then I sent it off to Spaceship for vetting. I was told that they’d OK it within 2 weeks.
Then, silence… I assumed that they didn’t like the negative aspects I had described in my review, but I kept following it up every couple of weeks. Two months later, I still hadn’t heard anything, nor received any payment. So I sent them a final follow up saying that I had decided to withdraw my review, and that I would instead write a review of their review submission process, free of charge! That got an immediate reaction. Within 24 hours a couple of different Spaceship staff contacted me with apologies. They blamed the lack of payment on an accounting error, and they once again promised to arrange the payment, despite me telling them not to bother since I had decided not to go ahead with the review. But they insisted, saying that I deserved to be paid the agreed sum regardless of whether the “advertorial” got approved, and anyway they already had my bank details so I couldn’t really refuse the payment. Note that the word “advertorial” was nowhere in the original brief. So, full disclosure: it’s possible that at some point I will receive $250 from Spaceship in payment for an article I wrote about three months ago, which isn’t this article. At the time of publishing this, I have not received any payment.
None of the above inspires confidence in Spaceship, and I really can’t recommend their product. Accounting system errors are a red-card for any investing platform. But, that doesn’t change the fact that there are some things which I really like about Voyager. So, in the spirit of even handedness and honest review, here are some excerpts from the original article:
The best thing about Spaceship Voyager is the cost: it’s ridiculously cheap. If you have less than $5000 invested in it, there are no fees. Zilch, nada, mei-you. No transaction or brokerage fees, no buy-sell spreads, and no management expenses. For balances above $5000, the fees are still extremely low. The passive Index portfolio has a management expense fee of 0.05% per annum, and the active Universe portfolio costs 0.1%. These fees only apply to the part of your balance which goes above $5K, so your first $5K is always free. Try and find a comparable investment product on the Australian market with lower fees than that, I dare you. (And if you do find one, please leave a comment below!)
Voyager’s interface is nice and simple to use. It’s entirely app based, so you do everything from your phone. It’s a streamlined experience, without a lot of the complexity that seasoned investors are used to putting up with. Of course, many will also see that as a negative, but Spaceship’s target audience will find it easy to get into. And if you’re a finance nerd like me, you’re probably already getting your fill of detailed data from your favourite online news, chat, and blogging sites. The user interface has an elegant, visually appealing layout, which also helps to take some of the fear out of investing. Importantly, Spaceship’s support team are responsive and helpful. I shot them a few questions before deciding whether to invest with them, and I got timely, comprehensive answers.
Of course, it’s not all roses. Apart from my negative experiences with their marketing department, I also have some reservations about their investment product, which I included in the article I wrote.
Voyager is having some teething troubles, symptoms of Spaceship being the new kid on the block. For example, there’s no way to see the fund’s past performance. The fund only began in April this year, so there isn’t much history anyway, but when I asked the Spaceship support team for more data they told me that regulatory compliance prevents them from publishing even the short performance history that they have. Of course, this will be solved sooner or later, once it has sufficient history under its belt.
Also irritating is the fact that the only way to invest in Voyager is by setting up a direct debit to automatically take money out of your bank account. You can’t directly transfer money from your bank account. But again, this is fairly minor, and again, they said they’re working on it.
Their marketing department seems to be out of touch with their millenial target audience. They’ve been accused of astro-turfing on Reddit and carpet-spamming in other online forums (such as in comments on people’s blogs!).
Their Product Disclosure Statements are annoyingly vague. They seem to have tried to make them accessible to casual readers, rather than making them exact and unambiguous. Personally, I prefer a good, clear PDS that spells out the terms and conditions without any uncertainty. Just as an example of this, it was difficult for me to figure out how the Index portfolio ‘chooses’ (passively) the 100 foreign companies it holds. In the product description, it just says that they are large international companies. I had to ask them directly to clarify that it’s the 100 largest international companies.
Another worrying clause of the PDS states that Spaceship can suspend redemptions at their discretion during periods of market volatility. That means that when you decide to pull your money out, they might prevent you from doing that. Just temporarily, of course. But in the event of significant market volatility, or the onset of a crash, being temporarily unable to retrieve your investments could leave you without much investment left by the time the suspension is lifted. I can see why having that ability makes sense, but I want the freedom to act on whatever hunch or instinct I might have. Removing that freedom could lead to a race to withdraw funds, potentially amplifying the volatility.
The biggest issue is about trust. I find it hard to believe that the rock bottom fee structure will last forever. I can’t see how they can make a profit if most of their investors pay zero or close to zero towards their management expenses. I asked them this question directly, and they gave me a sideways answer about being funded by venture capital. Without something more concrete, I have to assume that the prices will rise as soon as they get enough customers. When that happens, investors will be forced to decide between getting gouged on fees or paying the taxman a premature capital gains bill for withdrawing from the Voyager.
Having trust in your investment vehicles is absolutely essential. It’s the only thing that’ll keep your hand steady in the next market crash. I don’t mean trusting that the investment will perform well, because I’m not naive enough to believe that a history of good past performance can ensure future performance. I mean that I want to see signs of good judgment on the part of the whole company. That would give me more confidence in Spaceship being able to weather adverse market conditions or other spanners that could get thrown into the works, such as the vagaries of regulation and compliance. More confidence in their decision making would also help me to trust that their current ultra cheap fee structure will continue indefinitely, rather than potentially being a loss leading plan to grab market share.
So that’s that. If you’re looking for the cheapest investment option, look no further. But, as always, caveat emptor. Buyer beware. Whether or not you choose to trust Spaceship with your hard earned is up to you. This is something that no amount of doing your own research will provide, so you’ll have to go with your gut instinct.
I actually tried to make a tiny investment into their Index portfolio, just $100 for research purposes. However, the transaction didn’t go through for some reason. I didn’t get any notification in the app or any email telling me that it had failed, but I watched my bank balance, and nothing came out. After a few days I contacted them to find out whether I had been issued any units. They told me that there had been another accounting error and the transaction had failed, and they suggested that I try again. I did not try again.