By Daniel Lanyon on 27th February 2018
The firm, backed by European Asset Management giant ETS, will launch its wealth management proposition next month.
The digital wealth management market has been a busy space for the past few years with breakthroughs in technologies such as machine learning promising big changes to how investors’ money is looked after in the coming decade.
Now, the UK digital wealth management market is about to receive another new entrant to this challenge in the form Exo Investing, which bills itself as one of the most ‘next generation’ platforms to launch yet.
The investment manager gives private investors access to sophisticated risk management tools it says were “once the preserve of institutional and high net worth clients” only.
Most robo-advisers – or digital wealth managers as they are increasingly called - onboard new investors through automated risk-tolerance procedures involving a series of questions. This ultimately leads to be placed into a risk-targeted portfolio. Different platforms have more or less of these discrete portfolios with Nutmeg, the industry leader in terms of assets under management having 10 and Scalable Capital, it’s closest competitor, having 23.
Exo, meanwhile, also onboards new clients in a similar manner to the likes of Scalable Capital and Nutmeg but also says its proprietary technology builds each investor a completely individual portfolio set around their preferences within its own ETF universe.
The firm expanded by saying: “We expect our first customers to be DIY investors who want the support of bespoke portfolio management, but we also think we will disrupt the traditional IFA market as online investment management becomes increasingly mainstream.”
Investors can make unlimited adjustments at no additional cost - no penalty for making changes and it says it has independent ETF selection with no commercial relationships.
The platform analyses all ETFs available and filters this down to an ETF universe of 500-600 ETFs.
Next Exo uses the categories investors select across asset classes, regions and sectors and combines this with their investor profile and risk appetite to determine which ETFs should be included in their portfolio.
The portfolio is then optimised against market conditions with changes recommended by the risk management algorithms automatically implemented as frequently as once per day.
While every portfolio is adjusted to match the required level of risk from the investors’ preference to be overweight a certain asset class or security – European corporate bonds for example – the rest of the portfolio is in turn re-balanced to reflect how that addition changes the risk profile.
Again in the firm’s own words: “Exo is taking consumer investment management to the next level, moving beyond static products to create an individual investment journey for everyone. It is the first online investment manager to combine the bespoke risk management of institutional investing with the control of a personal portfolio and the low cost of an online solution."
The firm is backed by ETS, a major European asset manager, and is not yet live but is expecting to launch in late March.
Exo can currently take new ISA accounts, and ISA transfers will be ready this year with the launch of a SIPP in the coming months.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.