Commsec Pocket Review

 

Investing has always been big business, and unless you are fortunate or crazy enough to be completely removed from the financial world the stock market very likely has a direct impact onto your wallet today and your retirement prospects either now or in the future.

Why is this? Well that is a topic that I could write 100,000 words on, but in simple terms the stock market and stock investing allows businesses to operate, grow raise capital and expand, it allows individuals to profit and loss, countries to trade with one another and provide a future and pension allowances for their populations.

The stock market is definitely becoming more mainstream, and now a good portion of our online targeted advertisements are showing investment platforms, stock charts and crypto currencies. These are quickly making their way out of financial news articles and into mainstream news and everyday social media. Generally it's the big swing stories that are put up in lights; the scenarios where billions of dollars are wiped off investments in an instant or where a wildly lucky individual has turned rags to riches with some lucky picks in the market. Naturally the idea of winning big is a draw and more and more platforms are finding ways to expand their market share outside of males in their 20’s to 30’s who have historically been more interested in investing.

There is big business in the stock market and there is a definite market share position to be capitalised on by getting the everyday person both interested and active in investing in it.

As we sit in 2021 there are now numerous platforms that really break down the barriers to entry and make investing easier to get into and probably a little bit more fun then it has ever been before.

Commsec Pocket – Investments Within Reach

Commsec Pocket is the Commonwealth Bank’s attempt at doing just this.

If the thought of market research, chart analytics and candlesticks gives you nightmares, then Commsec Pocket may just be what you are after. Commsec Pocket is the ‘simpler evolution’ of the overall Commsec platform which has been in existence since 1995. The original Commsec tool allows investors access to nearly all Australian stocks and also a large number of International and US stocks. To be honest when you look at the Comsec you would nearly think you are still back in 1995, the interface is dated and somewhat clunky but all the information you could ever need is there if you know how to get to it. I think that the reality is the majority of people simply don't know how to get to it and as such Commsec has an above average barrier to entry

Commsec Pocket attempts to solve that by essentially hiding the complexities and simplifying the process into its most basic form. As of writing this article Commsec Pocket offers investments in only 7 different Exchange traded funds (ETF’s for short) .

The ETF's on offer cover the following investment areas and have even been given catchy names so that they feel friendlier

• Aussie Dividends
• Global 100
• Aussie Top 200
• Emerging Markets
• Health Wise
• Sustainability Leaders
• and Tech Savvy

None of these are new ETF's to the market, they all existed before Commsec Pocket’s release, they are simply new nicknames for existing ETF’s. The official ticker and formal name for each of these ETF’s are

• SYI - SPDR MSCI AUSTRALIA SELECT HIGH DIVIDEND YIELD FUND
• IOO - ISHARES GLOBAL 100 ETF
• IOZ - ISHARES CORE S&P/ASX 200 ETF
• IEM - ISHARES MSCI EMERGING MARKETS ETF
• IXJ - ISHARES GLOBAL HEALTHCARE ETF
• ETHI - BETASUSTAINABILITY ETF UNITS
• NDQ - BETASHARES NASDAQ 100 ETF

I will cover ETF’s in much more detail in a future article, but in simple terms ETF's are essentially an amalgamated  group of companies which have been selected based on common aspects of their business, geographical location, market sector or other financial drivers that they have in common.

By grouping these companies together into a single common fund with common traits it is expected that they will generally follow a similar growth trajectory.

The major advantage of this approach is that the ETF’s essentially averages out the companies within the fund and is therefore not as susceptible to crashes as a result of major failures or an individual business going under. This cuts both ways however and on the flip side of this if an individual company contained within the fund goes gangbusters the overall average of the fund’s performance will be lower then that of the individual company.

ETF's by their very nature provide an element of market averaging and stability that individual stocks do not offer. They are generally considered to be a lower risk investment than individual stocks. That being said an ETF is tracked in the exact same manner that an individual stock is tracked, and charts are drawn that shows its performance over time. If you were to look at an ETF chart with no other information you would think it is just another stock.

So back to Commsec Pocket

The specific ETF's on offer as part of Commsec Pocket generally provide a good coverage of the variety of possible markets out there but noting that these are reasonably mainstream ETF's there are some overlaps and duplication of companies across the ETF's that are offered.

Apple for example makes up approximately 13% of both the Global 100 (IOO) and Tech Savvy (NDQ) ETF’s. What this means is that if the Apple share price increases the value of both Global 100 (IOO) and Tech Savvy (NDQ) also increases, and if the Apple share price decreases the value of both Global 100 (IOO) and Tech Savvy (NDQ) also decreases. In very simple terms if you are invested in Global 100 (IOO) and Tech Savvy (NDQ) your exposure to Apple specifically is essentially doubled. This aspect is not well explained within the Commsec Pocket documentation and is something that investors should be aware of.

App Interface

 

The interface of Commsec Pocket is simple and easy to read. When you log in you're greeted with the view above which is an immediate snapshot of your investment position. It gives you an indication of your investment growth, what cash you've actually put in and when your last investment was.

You can then scroll down to see the following screen where you can see the individual values of each of your ETF's, again it is immediately obvious what profit or loss you have made on your investments but in terms of dollars and percentage profit (green arrow) and loss (red arrow)

 

 

I personally have investments in all seven ETF's, which I suppose in theory provides me even more diversification then an individual ETF but being completely honest I invested this way purely because I liked having some money in each of the ETF's. It felt more complete and there was an element of personal satisfaction to it. It felt more like a game with some positive reinforcement rather then an actual investment and that is probably what the app is designed to do. Please be aware of this if you are obsessed with games or if you have completionist personality. You may find yourself wanting to invest more or at a rate that is higher than that you initially planned.

Clicking on any individual ETF brings you into a little bit more information about your investment into that EFT. Here you can see exactly what you have contributed, what your ETF unit purchase price is, which is averaged if you have invested into the same ETF more than once. Then right down at the bottom of this screen is the “Sell” and “Invest” button. These are self explanatory and allow you to either buy more ETF’s to increase your investment, or sell some or all of your current holding.

 

Scrolling down further in this screen brings you to a more detailed breakdown of the exact companies that make up the ETF as well as why the ETF exists or what its overall goal is. You can also see chart data from the ETF and how it's performed in the past, the current price of the ETF and the distributions of  the ETF against the market sectors its companies make up. These can vary from time to time, as the value of the underlying companies within the ETF fluctuate which in turn makes the distributions vary accordingly. This information is live, so will likely look different when you open this within your own mobile app.

 

 

What is Least Amount I Can Invest?

Commsec Pocket operates on a ‘whole unit’ basis, meaning that you must buy an exact integer number (whole number) of ETF units. This means that there is a physical minimum amount that you can invest at any given time.

As of now, the cheapest ETF unit available in Commsec Pocket is a unit of ETHI - Sustainability Leaders, which is approximately $11.00. This means the minimum investment would be $11.00, not including brokerage fee, covered later in this article. The fee structure is not set up for micro-investing, I really recommend that you aim to always invest in values of at least $200 so that your fees are always <1% of your investment value.

So when you are investing in Commsec Pocket, after selecting you ETF you then select your maximum investment amount. Let do an example for clarity, you want to invest $300.00 into ETHI, so you enter your maximum value. Using $11.00 as the unit cost the app then calculates that you would be able to 27 full units of ETHI, which in this example is a $297.00 investment.

Your total costs of investment would then be $297.00 + brokerage fee of $2.00, for a total cost of $299.00. The total value of this investment is $297.00.

 

Commsec Pocket Fee Structure

As we have already said, Commsec Pocket has been established to fill a market gap for everyday investors, to make it easier to get into the market. It still however comes with fees that you need to be aware of. As of writing the fee structure for Commsec Pocket is as follows:

Brokerage Fee’s	Trade up to $1000, buying or selling	Flat fee of $2.00
	Trade over $1000, buying or selling	Variable fee of 0.2% of the trade value
Other Fees	Late settlement fee	$10 if your funding account has insufficient funds to cover the trade
	ETF management fee	Variable fee of 0.09% to 0.67% per year, which is subtracted from the ETF value automatically. Worth noting this is actually charged by the ETF providers and not Commonwealth Bank themselves.

There are no account keeping fees directly charged by Commonwealth Bank, so leaving your account dormant will not cost you anything directly. The ETF management fee will still be charged however, but in the general scheme of things this not significant.

How to Fund your Commsec Pocket Account

Commsec Pocket is a Commsec product provided by Commonwealth Bank. It therefore appears in your Netbank and Commsec accounts as a new account (Netbank) or Portfolio (Commsec). What this means is that you can get a snapshot of your Commsec Pocket balance if you log into your Netback account or you Commsec profile. Funding your Commsec Pocket investments requires cash to be available within a separate linked transaction account.

Commsec Pocket operates on the same funding method as Commsec which the principle of T + 2 days, or Transaction Date + 2 (two) business days.

Essentially this means that when you choose to invest in Commsec Pocket, Commonwealth Bank instantly purchases the ETF on your behalf with funds that they have in their own holding accounts. This is bought in good faith by Commonwealth Bank with the understanding that your transaction account will contain sufficient funds to cover the purchase cost plus brokerage in 2 business days time.

Let use the same example as before, I decide to buy my 27 units of ETHI on Friday which again is the same $297.00 investment value as before. Immediately, Commonwealth Bank buys me 27 units of ETHI and that value shows up in my Commsec Pocket account. At this time none of my own money has left my transaction account, so it looks like I actually have twice the value of the ETF’s bought in my Commsec Pocket account and in my transaction account.

In 2 business days time, which is Tuesday in this example, Commsec Pocket will attempt to debit $299.00 from my transaction account to cover the $297.00 + brokerage fee of $2.00. It is at this that I must have these funds in my transaction account to avoid incurring the Late settlement fee. For the novice investor this can be confusing, and if you use your transaction account for other day to day expenses or direct debits, you could end up with a value below the debit amount. Unless you like paying fees DO NOT DO THIS!

Overall Summary

As you have seen from the screen grabs in this article, I am a user of Commsec Pocket, and I will continue to be one. I use it mainly to invest up to $1000 at a time as I find the brokerage fee of $2.00 to be extremely competitive at that investment size.

There is a lot of comfort in having your investments with an institution like Commonwealth Bank, and I personally found it to be an enjoyable way to invest regularly without having to understand the fundamental and technical analysis of everything you are investing into. I have put my own positive and negative opinions in the table below to hopefully help you decide if Commsec Pocket is right for you or not.

 

	Money is invested with a reputable financial entity		Limited selection of ETF’s to invest in, you will also need to be in the Commbank infrastructure
	The app interface is intuitive and extremely easy to use		It makes investing feel like a game, which can be dangerous in the wrong hands
	Fees are very competitive for investments between $500 and $1,000 dollars		Not suitable for micro-investing, or trading
	Easy to set up regular investments to build your portfolio over time

Quick Lessons Learned

Investing is serious, your money may grow if the underlying asset grows, but equally you capital is at risk, and you can lose money if your investments decrease in value.

With ETF’s especially, do not open the app every day, you will quickly become obsessed with charts and the green and red arrows beside you investment values. I also suggest that you do not buy and sell erratically to beat the market, as you will incur unnecessary fees and will be worse off in the long run.

Have an investment plan and stick to it, I suggest setting aside a regular amount each month that you are happy to lose and set that as your regular investment.

The investment options in Commsec Pocket are buy to hold type investments, you will benefit from your investment’s time in the market rather than timing the market.

Ensure have have the necessary funding in your linked back account 2 business days after your investment to avoid failed payment fees.

I hope the above was useful, this is more of a review of the platform than a step by step which I will be covering in a later article.

Thanks for your interest

Brian