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Wealth Tech Market Map: 90+ Companies Transforming Investment And Wealth Management

 

 

“Wealth Tech Market Map: 90+ Companies Transforming Investment And Wealth Management”

By CBInsights, 24/3/2017

Wealth tech investments reached a record of 74 deals in 2016. This subset of fintech companies offer an alternative to traditional wealth management firms by offering technology-enabled tools that are advancing the investment and wealth management profession.

We identified over 90 companies in the wealth tech space and organized them into 7 main categories based on the services and software they offer, then sub-categorized them by the client group they serve, whether business-to-consumer (B2C), business-to-business (B2B) or both. B2C companies serve individual or retail investors, while B2B companies provide software and services for wealth managers, family offices, or investment advisors.

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Financial Observer – Quant screens a tonic for thematic robos

roboadvice

 

“Quant screens a tonic for thematic robos”

By Financial Observer, 17/03/2017

Quantitative screens can increase returns from thematic robo-advice portfolios using two distinct approaches to building indices, according to a new whitepaper from wealth management software provider Quantifeed.

The firm’s ‘Designing thematic indices with a quantitative factor’ report suggested that based on empirical research of past investment performance, robo advisers could boost returns on their model portfolios by selecting securities based on both investment themes and factor indices.

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ifa – Robo-advice portfolios boosted by new methodology: Quantifeed

ifa

 

 

 

“Robo-advice portfolios boosted by new methodology: Quantifeed”

By Larissa Waterson, 16/03/2017

Returns from thematic robo-advice portfolios can be boosted by using quantitative screens without increasing risk for investors, according to a whitepaper from digital investment solution provider Quantifeed.

In its whitepaper titled Designing thematic indices with a quantitative factor, released today, Quantifeed analysed an improved methodology for global thematic index construction to help digital wealth management providers drive higher returns for clients without additional risk to portfolios.

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Financial Standard – Robo-advice portfolios benefiting from quant factors

Financial Standard

 

 

“Robo-advice portfolios benefiting from quant factors”

By Karren Vergarra, 16/03/2017

Returns from thematic robo-advice portfolios can be boosted by using quantitative metrics that won’t increase investors’ risk, according to digital investment solutions company Quantifeed.

In its whitepaper, Designing thematic indices with a quantitative factor, investors with robo-advice portfolios can improve their risk-return profiles by combining traditional stock selection, building indices and overlaying this with quantitative factors.

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Adviser Innovation – Quantitative screens improve risk-adjusted returns

adviser innovation

 

 

“Quantitative screens improve risk-adjusted returns”

By Killian Plastow, 16/03/2017

Applying quantitative screens to thematic robo-advice portfolios can improve results without increasing risk, according to Quantifeed.

The company said there were currently two methods for building indices – thematic, which utilises investment themes, and factoral, which draws on empirical research of past returns – but added that a robo-advisers using a combination of the two are likely to offer better results.

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Money Management – Robo portfolios benefit from themes and factors


 

“Robo portfolios benefit from themes and factors”

By Hope William-Smith, 16/03/2017

Thematic approaches to building indices can be paired with factor approaches to deliver stronger risk-adjusted performance for investors’ portfolios, according to analysis from digital wealth management solutions firm, Quantifeed.

Quantifeed’s whitepaper by senior quantitative strategist, Gaudi Schneider, analysis found while the two approaches to building indices, thematic indices and factor indices, had individual advantages, they produced best results in tandem.

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Robo-advice portfolios boosted by themes and factors, Quantifeed analysis shows

Stocks are ingredients to an index as spices are to a meal

Returns from thematic robo-advice portfolios can be boosted by using quantitative screens, without increasing risk for investors, according to a new white paper by Quantifeed.

The leading provider of B2B digital wealth management solutions in Asia Pacific, Quantifeed, today released the paper Designing thematic indices with a quantitative factor. It outlines an improved methodology for global thematic index construction, which features in its portfolios for financial institutions servicing the mass affluent segment in the Asia Pacific region.

Gaudi Schneider, Quantifeed’s Senior Quantitative Strategist and author of the white paper, says there are two distinct approaches to building indices: thematic indices, based on investment themes; and factor indices, based on empirical research of past investment returns. While the former approach is based on a forward-looking growth story for a niche industry, the latter uses quantitative variables, such as volatility, yield, size and momentum.

“The thematic and factor approaches to building indices have their own individual advantages for digital wealth management services. However, at Quantifeed we believe that through a calculated combination of both, financial institutions can deliver a much better risk-adjusted performance,” says Mr. Schneider.

“Mass affluent consumers in Asia Pacific who are receiving wealth management online can truly benefit from a quantitative overlay to their portfolios.”

“Financial institutions, on the other hand, can also capture the opportunity of digital wealth management services not only by servicing this segment of clients remotely, but also by delivering to them an enhanced portfolio performance,” he added.

Mr. Schneider explains that one way of introducing a factor to a given thematic portfolio is to apply weights to securities based on a specific variable, for example, volatility, instead of the standard weights based on market capitalization.

“Low volatility stocks have been shown to outperform higher volatility stocks over extended periods of time,” he says. “Taking advantage of this phenomenon can be achieved by giving stocks with low volatility a greater weight in the portfolio. We call this inverse volatility weighted,” he explains.

To illustrate the effect that a factor can have on a thematic index, Quantifeed looked at a group of stocks of U.S. listed companies that are active in the design of robots and automation services. By applying the inverse volatility weighting (IVW) quantitative factor to this group of stocks, Quantifeed’s model outperformed the original index by 11 percentage points over a three-year period between February 2014 and February 2017. While the original version of the index declines by 4% during this period, the version with the quantitative overlay rose by 7% during the same period. (See table)

Table: Compared performance between Feb-2014 and Feb-2017


 

To enhance performance further, Quantifeed’s analysts applied an additional quantitative factor but into the stock selection process. The additional screen included the fundamental measurement of Return-on-Invested-Capital (ROIC), considered by the analysts as an appropriate criterion for the robotics industry, which usually requires large investments in research, factories or machinery.

The results of the ROIC inverse volatility weighted index showed this time a 11% return during the three-year period, leading to an outperformance of 15 percentage points over the original index. (See table)

In neither of these cases did the factorized portfolios gain in volatility versus the original index.

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About Quantifeed
Quantifeed’s automated investment platform allows financial institutions to offer advisors and customers a digital wealth management experience under their own brand. Quantifeed’s software and financial models provide banks, brokers and wealth planners with a configurable solution to suit their wealth management objectives. Firms can reach hundreds of thousands of consumers quickly and economically. The platform hosts portfolios of stocks, funds and other asset classes across all major global markets. Investing solutions can be based on risk assessment, life goals and thematic ideas. Quantifeed offers a library of portfolios for asset allocation, thematic investments and other trading strategies.

The company was founded by former investment banking executives Alex Ypsilanti, CEO, and Ross Milward, CTO, in Hong Kong in 2013.

 

Robo advisor handshake

Riding the Wave: How Robo-advice Provides Access to Global Investment Trends and Themes

Originally published on LinkedIn

Today some of the investment strategies which are most in-demand by investors throughout Asia-Pacific have a thematic approach at their core. Thematic portfolios offer exposure to certain economic, social or technology trends, such as the increasing pressure on potable water supplies, the surging use of robots or the rise of social media.

But choosing the right theme in which to invest is, of course, only part of the equation. Selecting the right stocks too can make a tremendous difference in capturing the value of the global trends that are attractive to invest in. And in this regard, financial institutions in Australia who are looking to build or enhance a robo-advice offering for their clients, can benefit from offering quantitatively managed portfolios.

A quantitative methodology in robo-advice services is a viable and cheaper alternative to traditional human-made portfolios. Investment specialists, such as Quantifeed, develop the rules of a quantitative portfolio. But after the rules have been defined, there’s no room for human misjudgement during the execution.

Here’s how we do it. Every time we construct a thematic index that can be used by our clients, we first conduct thorough research into a specific theme. We look at what defines this theme and what are its economic drivers. Next, we aim to identify stocks that are impacted by the factors central to the theme and, finally, we decide how to weight these stocks.

Our approach

Let’s look at the theme of social media. To select the components of this theme we consider companies that can be described as social media networks. These are the platforms that individuals use to keep in touch with friends and share content with a global audience. The theme itself is highly attractive to invest in. There are currently over 2 billion people using social media channels in the world today and the number is expected to reach 3 billion by 2020.

To select the potential winners within this theme, we first select stocks from a universe of US-listed companies with a market capitalization of over US$50 million and a daily liquidity greater than US$5 million. Given that a third of global internet users are based in Asia, we include ADRs in this universe of companies as well.

To identify relevant companies within this theme, we look at the general company profile, as well as specific business revenue segments. We then select up to 20 stocks from those relevant companies based on their valuation and the popularity of their platform. In order to select companies with strong financial position, we then screen out any company with no or negative earnings in the remaining selection.

The rules-based system makes the selection of the relevant group of stocks a systematic process. Our methodology in this example picks companies that derive more than 20% of their revenue from at least one business segment relevant to the social media theme.

Integration with technology

Our index design also integrates with the digital capabilities of our technology. Because users trade the individual securities comprising an index, an important aspect of design is the tradability of stocks. The number of index components and their weights are other important variables. To improve diversification, we equally weight our indices or utilise factors such as volatility or dividend yield to determine the weighting of stocks. Interestingly, the application of such weighting methods often leads to outperformance and improved risk/return characteristics relative to a traditional market-cap weighted index.

As a further point of differentiation, our white labelled B2B platform allows financial institutions the flexibility to adapt the index to their own requirements, for example to facilitate a very low investment amount across a reduced number of stocks. Our technology can generate these changes automatically, or enable the user to modify the index composition by eliminating or adjusting the trading order before submission for execution.

If you’re in an Australian financial institution looking to build an engaging robo-advice offering for your customers, let’s meet! You may contact me on graeme.brant@quantifeed.com

Financial Observer – Advice engagement will be real robo test

 

“Advice engagement will be real robo test”

By Financial Observer, 17/03/2017

Generational differences in the way clients seek advice would be a key catalyst for new digital entrants to capitalise on the growing millennial market by tailoring their models to the next wave of Australian investors, according to white-label digital advice provider Quantifeed.

Speaking to financialobserver, Quantifeed senior executive for strategic partnerships in Australia Graeme Brant said that while millennial investors were typically fee conscious when it came to seeking advice, the real test of digital advice providers in Australia would be the extent to which they could bridge the accessibility gap and draw in new client segments.

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ifa – Global equities and Trump


 

 

 

“Chances are that equity risk and opportunity continue to become more sector and country-specific than in the past. An investment approach focused on sectors and emerging trends might be advantageous in this environment.”

Quantifeed Senior Quantitative Strategist, Gaudi Schneider

“Global equities and Trump”

By ifa, 3/2/2017

What Donald Trump, rising interest rates and more will mean for global equities amid a growing investor appetite.

The past year in global equities has seen a surprising turn of events.

The lead up to 2016 was filled with pessimistic views from analysts, who believed much of the volatility from 2015 would creep into the new year.

And it did – at least for the first half of 2016. According to research from Colonial First State Global Asset Management, investor confidence in equities fell by a total of 29 per cent in the months between January and May last year.

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