Swiss brokerage group Swissquote announced on Tuesday that it has launched fractional trading for equities, ETFs, cryptos, and its own structured products.
The new feature means that investors can effectively buy a smaller chunk of any of these assets.
Fractional trading has become increasingly popular over the last five years or so, particularly for US equities.
Singles shares for big name US tech stocks, for example, can be hundreds of dollars. Tesla would be in the thousands if it had not undertaken stock splits.
Fractional shares make these big names more affordable.
Another factor is the ability to simplify allocations within an investor portfolio. If you are a regular person and are investing $1,000 of your paycheque each month, it becomes much simpler to invest those funds if you can buy a fraction of a share.
For example, Alphabet shares currently trade at just shy of $165. If you want 5% of your monthly investment in Alphabet, it is much easier to just buy $50 of a fractional share with that monthly $1,000, as opposed to having to buy the whole share and then retroactively make the weighting work.
You can see that this what Swissquote is thinking too because they also launched a Savings Plan alongside the new fractional offering. This allows clients to set up recurring, scheduled buys each month. Again, this process is made much simpler if you can buy proportions of a share. That is true for large size client accounts, but particularly for those with smaller ones.
The move also reflects Swissquote’s efforts to move away from purely leverage products. The company was historically focused on the FX/CFD market, but now has banking products and is heavily emphasising its long-term investment offering.
