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For far too long Australians have been paying too much to invest on the ASX. Then along came the Superhero trading app to disrupt the status quo. Superhero opened up ASX trading for Australian investors. In this Superhero review I will do a deep dive into the Superhero fees, features ASX options and platform. I will also give my experience in using the platform and why I think it’s a great Investing app to try. I hope you enjoy this Superhero review.
What is Superhero?
Superhero is an investing app founded in Sydney that offers its users the ability to invest in Australian (ASX) and American listed companies and ETFs. It has become extremely popular among Australian investors as it disrupted the legacy brokerage model within Australia.
Superhero is a part of the new breed of Financial technology companies. They are using technology to disrupt industries that have stood still for decades. Along with Neobanks, these new investing platforms have the younger generations as their biggest user base. Highlighting how a seamless user experience is mandatory for Millennials and Gen Z.
Superhero offers brokerage free ETF purchases and $5 flat fee trades for over 2,500 Australian equities (ASX). It was initially founded with a long-term goal of disrupting the Superannuation industry, hence the name. Superhero most recently enabled US investing too.
It started with low cost brokerage investing as a way to win over Millennials and provide a superior alternative to the platforms already on the market. This move could still pay big dividends as Superhero recently announced their Superannuation oferring. The superannuation industry has $3trillion in assets and will continue to grow while being ripe for disruption.
How Does Superhero Work?
Before I delve into how Superhero works I need to first mention how the Australian Stock Exchange (ASX) works. Highlighting the difference between CHESS and Custodian models.
The ASX is the exchange where stocks are bought and sold. When a trade has occurred, the ownership of those shares needs to be transferred from one person to the other, this is called settlement.
On the ASX this settlement process is conducted by a system called Clearing House Electronic Subregister System (CHESS). This system settles and records transactions for all users of the ASX. This process costs money but also provides users with records showing they are the specified owner of the shares.
Platforms that use CHESS sponsored trades will struggle to match the low fees on offer by Superhero. As each individual trade is settled via CHESS and incurs a fee from the ASX for doing so.
So how does the Superhero app offer low fees then? Superhero operates on a custodian model. This means that Superhero is the custodian of all the underlying shares, essentially holding the shares on your behalf.
In using the custodian model Superhero is able to obtain lower settlement costs and minimize the amount of trades occurring on the ASX. Therefore passing the savings on to their users.
There is a risk involved in using the custodian model over the CHESS sponsored platforms. Which is if the Custodian goes bankrupt then you will have to chase down your legal access to the shares. So this is always something to weigh up on the saving of brokerage for direct ownership.
For what it is worth, Superhero has clearly highlighted this fact and said that should they go bankrupt, the shares can be transferred via a broker to broker transfer to another account.
As with all my other reviews, Fees are one of the biggest factors to consider when selecting a platform that will suit your investing needs. You will first need to have an investing strategy in place before you can assess the fees.
Superhero Fees are very simple. $5 flat fee brokerage for Australian company trades on the platform, doesn’t matter if you make one trade at $100 or $10,000 it will remain at $5. There is a $100 minimum investment amount for Australian investments and a $100 USD minimum for American investments. So make sure you take this into account when funding your investment account.
When investing in the US markets there are no brokerage fees charged when buying and selling investments. Only an FS currency fee of 0.5%
If you are investing in ETFs this doesn’t matter, however if you pick individual stocks to invest in and only invest $105 (including the fee). Then you will have been charged a 5% fee, which eats into your returns. So make sure you do the math before starting investing.
If you want to trade ETFs on Superhero, there are No brokerage fees. If you wish to sell these ETFs there will be a flat $5 fee on the sell trade. However, if you are investing for the long term and follow a buy and hold strategy there will be no fees!
The only other fee you can encounter with the current offering from Superhero is if you choose to fund your account via BPAY. Superhero will pass on the cost of funding through this platform and charge $1 inclusive of GST.
If you select to fund your account using PayID, there are no costs involved. Just almost instant funding of your account instead! With the addition of US investing, there will be an FX fee involved of 0.5% which is currently the lowest of the brokerages.
What Can You Invest In?
Superhero provides an investing platform for users to invest on the Australian Stock market (ASX). This means users have the option to invest in over 2,500 shares and ETFs listed on the ASX via Superhero.
Superhero allows investors to also invest on the US markets, this has opened up significantly more options for Australian investors. There will be more and more US investing options being released into the app over time. So check back in if your investment option isn’t currently available.
Superhero also has recently announced their Superannuation offering, which I will discuss later in this post.
The best feature of Superhero’s platform is the free ETFs, they were the first app to offer this. I will note that Pearler also offers a great option for free ETFs. However, their options are a bit more limited currently and aren’t as good as the Superhero ASX offering.
The ETFs are free to buy and have a $5 fee attached when selling. My investing strategy revolves around a buy and hold approach, and I am not phased by the custodian structure. So this platform and offering was a perfect solution for my needs.
There is a $100 minimum investment which is important to note.
How Does Superhero Make Money?
When companies offer brokerage free trades or free ETF investing options, you often have to wonder how they make money to stay financially viable.
In Superhero’s case I truly believe they are going hard for the Superannuation market. Therefore using this as a great way to gain future customers. Superhero is able to make money from its platform in a few different ways:
- Superannuation Product
- $5 flat fee for all australian brokerage trades on non ETFs
- 0.5% currency conversion fee for US investing
- Interest on cash accounts
Superhero will by far make most of its money from their Superannuation product. Given it has recently launched I wouldn’t expect much revenue to be driven there yet. However, give it a few years and this will be what drives most of the money for Superhero. Superannuation is a $3Trillion industry, so to get even a tiny slice of that pie is a lot.
The $5 flat fee for brokerage is currently the most visual way that Superhero makes money. The more that trade through Superhero, the more money they make.
Another way Superhero makes money is from receiving interest on any cash that sits in your brokerage cash account. This is not as visual for users as we don’t see any money leave our accounts. You just don’t receive any interest for your cash kept in your account.
Dividends & Tax Reporting
Given you are investing in companies via a custodian structure it isn’t possible for your dividends to be part of a Dividend Reinvestment Plan (DRIP). This is slightly annoying, especially if you just want to set and forget your investments.
While there might be some benefits for choosing when to reinvest your dividends at potential opportune times, it can equally go against you. I often prefer DRIP plans as companies can provide you a discounted price for those reinvested dividends.
You unfortunately don’t get this benefit with dividends from Superhero currently. The good news though is that you still receive all the franking credit benefits of your dividends. The platform also does a good job of showing you when your dividends are due and how much you will receive.
You will need to report this dividend income to the ATO. Then depending on your tax situation you may need to pay tax on the remaining dividend amount or not.
Eitherway, recording and reporting information like this can be very confusing and difficult. Fortunately Superhero is compatible with Sharesight to help track and manage your brokerage account and tax reporting.
You can sign up for free here to Sharesight and track your portfolio and make it easier come tax time!
Recently Superhero launched their superannuation offering for their users. It offers users the option of two Superannuation products, Autopilot and Control.
Superhero Autopilot allows you to invest 30% of your portfolio multiple themed investments. While the other 70% is invested in the Superhero Global Diversified Index Portfolio. All of this for a fee of $1 per week and 0.49% of your portfolio balance.
The other option is Superhero Control, this allows you to invest up to 75% of your Superannuation in direct Australian equities and ETF’s. The remaining 25% will be invested in the Superhero Global Diversified Index Portfolio. All of this for a fee of $2 per week and 0.49% of your portfolio balance.
I look forward to checking this product out further and updating with a review of the ins and out of Superhero Superannuation.
I like using Superhero because of its free ETF purchases. This really suits a big part of my investing strategy of buying and holding for the long haul. The one downside to Superhero is that it doesn’t offer an automatic investing option like Pearler does.
At the moment Superhero has a wider range of ETF options to trade, but you need to physically log into the app and buy the shares each week. This isn’t ideal for those that want to set and forget their investing approach.
Currently I am okay with doing this due to the investment options I have with the platform, but would really love to see this feature added. It is one of the reasons I really rate Pearler as an investing option.
I have found the Superhero customer service team to be extremely helpful and I have always received fast responses from them through Instagram or e-mails.
Another really important factor I consider when choosing an investing platform is the resources they have put together for user education. This is often a good sign on how much they value their users being well informed on investing.
Superhero has held a few live Question and Answer sessions for their users and they do have a select few blog posts on their platform. However, I do feel their educational content is lacking considerably compared to the rest of the quality of their platform.
I would really love to see a bit more focus on this, especially as so many new investors are joining their platform. While it doesn’t put me off the platform as I feel very well informed it is a concern that newer investors have little info available within the platform.
There is plenty of information available for free on the internet that users can do their own research from. But the in platform education adds a nice touch for their users and I think this will become more important when they release their Superannuation offering.
One of the cool features from Superhero, is the recently released Superannuation offering. It provides their users with a way to control their Superannuation, while not having to set up a SMSF. I will update this Superhero review with more information on their Superannuation offering once I have used it.
Another cool feature is that Superhero is potentially going to list publicly on the ASX. This means you can invest in Superhero from within your Superhero app.
Superhero also recently announced Minor accounts, which enables you to open an account on behalf of your child. The assets will be held in your name on behalf of the minor, and any income will be on the adults tax return. The ownership of assets can be passed to the child when they turn 18 in a tax efficient way making this a really cool feature.
Pros & Cons of Superhero
- Free to buy ETFs
- Fixed $5 fee on any Australian Company Trades
- Zero Brokerage on US trades
- 0.5% FX fee (lowest of all brokers)
- Minor Accounts
- Superannuation Platform
- No Auto-invest feature
- US minimum trade size is $100USD
- Lacking Education Platform within App
- Non CHESS Sponsored (If that’s for you)
Who Is Superhero For?
Hopefully this Superhero review has covered most of your questions round the app. But below is a quick breakdown of who the Superhero app might be suitable for.
Superhero is for anyone looking at trading Australian companies with the lowest brokerage around. The fixed $5 is the lowest on the market by a long way and provides investors with a great entry point into the markets.
It is also a great option for investors to invest in both the US and Australian markets from the same platform. Currently the only other platform that offers this is Pearler and Stake will release their option in Quarter 3 of 2021.
If you want to follow a buy and hold strategy for a wide range of ETFs then this is definitely the platform for you. Currently the Superhero app has the widest variety of free available ETFs making it a great option.
If you want to set and forget your investments and have them on auto-pilot then you are better off using Pearler as Superhero doesn’t offer auto-invest features.
Sign Up Here
If you have enjoyed this Superhero review and you would like to get started investing with Superhero then you can sign up here. They don’t offer any sign up bonus like other investing platforms, but are still a great platform to try.