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‘Advanced Robo’ RiskSave Plans to Take Automated Advice Beyond ETFs

Back in September Muckle reported that RiskSave had hit its equity crowdfunding target in just four days as one of a number of start-ups that were attracting significant interest among investors (‘Fintech Boom: RiskSave hits Target in Just Four days’)

The company has taken compliance support and now operates under the regulatory umbrella of operational risk manager Sapia Partners; it has now been regulated to trade as an appointed representative both directly to retail and to institutional clients.

RiskSave is pledged to ‘help you to achieve your goals, by delivering smarter tools’ adding ‘we use an investment approach and risk management techniques that have previously been available only to investment banks and hedge funds’; it is currently allowing customers to sign up in a test environment and is taking a radical look at fees, eschewing percentage based charges in favour of fixed fees – ‘to treat everyone equally’.

RiskSave is the first Digital Asset Manager to offer our services free of charge

The company intends to use technology to keep its expenses low, and aims to be the ‘cheapest investing solution available’ – its site states that ‘RiskSave is the first Digital Asset Manager to offer our services free of charge’, in that its management and custody fees are optional.

RiskSave believes that it brings a new level of sophistication to robo-advice in that its portfolios move beyond the simple fund based solutions founded on a risk-managed basket of ETFs.

In a presentation to Robo-investing Europe 2017 CEO Dan Tammas-Hastings explained that rather than the common practice of buying a portfolio of ETFs, he believes that technology can deliver greater precision and that an investment universe of individual securities is more appropriate.

Mr Tammas-Hastings said that previously ‘the focus has always been on equity risk and this has worked reasonably well: equity ETFs are a cheap way to access a diversified portfolio’.

However, he believes that a wider universe of investments can reduce risk whilst increasing expected return, particularly when portfolios are reweighted in favour of fixed income where he thinks individual securities deliver better performance.

Mr Tammas-Hastings said that when ETFs or liquid funds are used to deliver increased fixed income exposure, the funds typically:

  • Underperform the index
  • Force a one-size-fits-all risk/return profile on all customers
  • Could be the next CDO-like risk

Mr Tammas-Hastings said ‘in a market shock investors want their fixed income exposure to provide a safe haven but there is no guarantee, or even any reason to expect, that liquidity providers will continue to support ETFs. This is likely lead to underperformance right when the hedging properties of fixed income are supposed to protect investors’.

powerful fixed-income analytics to generate superior, and more cost-effective portfolios

He believes that with what he describes as a ‘more intelligent portfolio’ it is possible to avoid these pitfalls and also save a layer of fees that would go to the ETF manager.

RiskSave claims that its algorithm uses powerful fixed-income analytics to generate superior, and more cost-effective portfolios that lower downside risk whilst maintaining liquidity.

‘We consider this a best-in-class representation of Fixed Income in FinTech & the RoboSpace’ said Mr Tammas-Hastings, ‘we believe this is a significant leap forward in multi-asset risk hedging for the retail market and the enabler to more specific and granular algorithmic individualised trading’.

‘By moving beyond ETFs not only do we hedge an observable Black Swan but we can generate tailored risk profiles similar to those available to the largest pension funds, and not sadly replicable in ETF space (yet)’.

RiskSave is offering anyone with more than 100 shares that wants to be on-boarded, the chance to jump the queue.

 

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