Exo Investing: a new breed of robo-adviser?
Once the preserve of high net worth individuals, AI, algorithms and tech are being brought to the masses, according to Exo Investing.
This means simpler platforms, lower fees and in essence, active management of passive funds.
What sets Exo apart is that it has the use of smart technology – advanced risk management technology – which helps to build a unique portfolio of Exchange Traded Funds (ETFs).
Investors answer a few key questions on their attitude to risk, their preferred asset class, region and sector, and Exo then creates your personalised ETF portfolio from a universe of near 600 passive funds.
Unlike other investment platforms in the robo-adviser space, portfolios aren’t pre-determined. As such, Exo says it is designed for private investors who want to take control, but don’t have the time to research products, design their own portfolio and continuously manage it.
Another differential is that Exo’s technology sweeps the market to monitor volatility, adapting investors’ holdings on a daily basis, if required.
Nikolai Hack, COO of Exo Investing, explains: “Investors build their individual portfolio which gives them a degree of control. But if you don’t like a region or sector, you can throw it out.
“Based on your risk profile data, the algorithms look very different. You can’t override the algorithm but you can change the input. These algorithms can take you out of the volatile movements so you don’t absorb the shocks.”
However, the automatic, continuous risk management and rebalancing does have a drawback. While it cushions the blow from the dips, it can lag on the upside, meaning investors may miss out slightly on any positive movements in the stock market before the algorithms catch up with portfolio holdings.
So let’s get to the nitty gritty…The minimum investment level is £10,000 which is far above the likes of Nutmeg (£500 for GIA and ISAs).
You may expect a platform which trades on a daily basis to charge you for the pleasure but Exo confirms the only charges are as follows: 0.75% per annum on investments up to £100,000, reducing to 0.5% above this level.
The annual management charge within the chosen ETFs are typically around 0.25%. Exo confirms there are no other charges – the annual fee is inclusive of any trading fees, regardless of how many trades are made.
At launch, money can be invested via an ISA wrapper, though Exo plans to allow investments as part of a SIPP in the future. It also hopes to include individual stocks, bonds and mutual funds.
Lennart Asshoff, CEO of Exo Investing, said: “This level of individually tailored portfolio and risk management has never been available to the private investor before. Exo is all about democratising access to sophisticated investment technology, using the latest advances in AI and risk management technology to break down the barriers to wealth and open the door to a new category of investing for as many people as possible. We want to revolutionise investing, making personalised investing available at scale.
“Our individualised service, made possible by the application of AI, is essential to managing each portfolio effectively. By taking into account each client’s specific circumstances – such as their investment objectives and point of entry into the market – we can optimise their allocation more effectively, exposing their portfolio to riskier assets in calmer markets and safer havens in volatile markets, maintaining their risk level and maximising the potential of each client’s investment.’’
Exo has been developed in partnership with quantitative asset manager ETS Asset Management Factory and key figures in institutional risk control, including the former heads of Compagnie de Benjamin Rothschild.
Exo Investing is a trading name of Finhub Technologies Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA).