Published in AustralianIT, July 1 2003

THE era of day traders making monumental fortunes by simply swapping shares on the web may appear to have gone with the dotcom collapse.

However, that doesn't mean online investment management has also disappeared.

Use of web-based tools to manage investments is now firmly established as a key strategy for many smart investors.

More than a million original visitors accessed online share trading sites in March, according to web traffic monitor RedSheriff.

The market is completely dominated by the Commonwealth Bank's CommSec service, which accounts for more than half of the total visitors to share trading sites in Australia.

Some of the less-popular services still manage to turn a tidy profit by concentrating on high-value trades, rather than volume.

One thing the internet hasn't achieved is a major shift in the power base of the investment community.

Relatively few companies have managed to establish themselves as purely online brokers, and most successful online providers are based on a successful offline business.

Of the top 10 providers, only E*Trade and TradingRoom were founded independently of existing brokerage firms, and both have since forged partnerships (eTrade with ANZ and Trading Room with several commercial providers).

One of the most popular destinations remains the official Australian Stock Exchange (ASX) site, which doesn't offer trading facilities but does give free access to market data and company announcements.

The collapse of competition among day traders has also meant that earlier price wars largely disappeared, leaving brokers to concentrate as much on service as pricing.

Depending on what price you pay, you can expect services such as automatic news updates, customised research, and access to related services, such as superannuation funds management and loan facilities for when you don't quite have enough funds to pursue that hot stock tip.

The central role of the internet in investment management is also reinforced whenever the share market rallies. Following such a rally on June 15, traffic to all share trading sites soared, according to analysis by web traffic monitor Hitwise.

Since April, general traffic to the share market category has increased by 7 per cent.

Hitwise's analysis also shows online investors are increasingly making use of multiple sites, ensuring they don't pay for information that is freely available elsewhere. For instance, about 8 per cent of visitors to the official ASX site come from either CommSec or TradingRoom, according to the analysis.

While much of the information on the ASX site is also available on share trading sites, it seems traders still prefer their raw data straight from the horse's mouth.

Although it may dominate online thinking, investment management doesn't begin and end with share trading.

As online banking options have become more complex, they have increasingly provided access to services that were traditionally only available in over-the-counter transactions, such as term deposits and superannuation funds.