The underlying holdings of a fund have always been a mystery to investors. What does it mean to purchase a fund? What is in it?
Some fund managers are transparent about how they invest their investor's money, choosing to post the underlying holdings on their website on a daily, weekly or monthly basis. Others only list the 10 largest holdings in the fact sheet, frequently making up less than 5% of the total fund.
Interestingly enough though, Neil Woodford posted the underlying holdings of his fund on the Woodford website every week. And yet, this did not help investors when his fund collapsed.
We should ask ourselves: why?
Fund information is all over the place. Difficult to find and then even more difficult to understand. Handed out upon (a lengthy) request in the form of an excel spreadsheet (or worse, a pdf) that is almost impossible to digest.
What would happen if we took a human-centred design approach to the investing experience? Can we leave users more informed and encourage better financial decisions and outcomes? Can we make the user experience delightful?
Putting the user first
We put the underlying holdings front and centre of the user experience, making it easily accessible for users.
We brought context to each holding with a logo and percentage weighting next to each one. Simple industry classifications were added to allow the user to easily take in the information.
We enabled users to explore more - adding in the company website URL and a short bio for each company.
We went through a series of in-person user tests as well as introducing the feature on our platform in order to gather quantitative insight.
An engaging experience
The first thing to note is that this is a strikingly different experience for the user. The information on this section of the platform requires a bit of a double-take.
User quote: "Could I really be invested in all these companies?"
Users have never been given this level of transparency before. And some users didn't even know their funds were invested at all!"
The logos provide a really welcome addition to the interface allowing users to quickly, and easily, identify the companies they’re invested in.
User quote: "I've never had this level of detail before about something I'm invested in."
User quote: "The level of detail is amazing"
Our quantitative feedback demonstrates an innate curiosity and intrigue from users with them spending an average of 50 seconds exploring this page. Over time, this remains an engaging feature with minimal difference between first-time and returning users in terms of time spent on this page. Transparency holds its value for all users.
Diversity is a pleasant surprise
The diversity of companies that users are invested in is unexpected - but a welcome surprise. Users feel more comfortable with this knowledge especially when they see a company they don’t like e.g. a tobacco company. Users are reassured that a single company only comprises a small minority of their pension fund. This is just one example of why the percentage value is highly valuable to users.
Users are also reassured by the diversity of investments; it helps them understand that their money is safe. They gain an understanding of the risk of their pension (larger companies and a greater spread of companies are seen to be less risky).
In short, the complicated topic of diversification is understood by users and provokes feelings of trust and reassurance.
Crucially, transparency prompts action.
User quote: "Now that I know what is in my investments, I can do something about it."
Users are finding value in the transparency data because:
- If they hear about a company in the news or in conversation they can find out whether they are invested in it
- They can see if they are invested in a company they do not like the behaviour of and how much of their money is invested here
- They can make decisions about their other investments
- They’re curious to see if anything has changed since the last time they logged in
By re-thinking the typical investment experience and considering how best a user might consume information, we can change how much they understand about investing and significantly improve the experience.
Making the information easily accessible and turning it into something that anyone can understand (rather than just an investment professional) leads to significantly better outcomes for the user.
They understand what it means to invest in a fund, the value add that a fund manager brings and the concept of diversification. What's truly exciting is that they now have the information they need in order to make better decisions about their finances and ultimately, take action.