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Digital asset management vs. Robo-Advisor

Why is it important to differentiate and what is behind these terms? Although they are still a niche existence, Robo-Advisor are increasingly in vogue. Almost every week another new provider starts on the market. Is this trend a paradigm shift or does it remain a niche existence?

What is a Robo-Advisor?

Robo-Advisors offer their customers automated solutions for asset management over the Internet.

The core elements of a Robo-Advisor and the associated added value for their customers should be:
1. a simple and digital customer interaction through an provided user interface
2. a lower minimum investment compared to traditional asset management
3. reduced costs in comparison to classic asset management
4. automated and rule-based rebalancing using algorithms
5. investment mostly in passive index funds / ETFs

The greatest added value for the client is the easy and simple conclusion of contracts and the opening of accounts and securities accounts. This is a real benefit in terms of convenience, allowing customers to access their money around the clock and from anywhere in the world via their smartphone, tablet or PC.

Automated and rule-based rebalancing is less complicated than it may seem and not a significant benefit to customers. Because in the long run it doesn’t matter whether I’m 0.80% or 0.82% invested in a security. It’s that I have bought the right securities at an attractive price and that they perform better than the overall market in the long term.

It is a fact that today’s algorithms and artificial intelligence for this area are not yet fully developed and are therefore far inferior to human investment specialists. They serve exclusively to support the investment process.

What Robo advisors lack as a core element is investment competence. It is probably assumed that it is included. But is this really the case? From an investor’s point of view, the most important success factor in investing is the right investment strategy and the associated decision for an asset manager. The competence to select the healthy and fast-growing companies from all the indices and to avoid the bad ones does not exist with the existing Robo-Advisorn, with a few exceptions.

Fear turns into average

Only because asset management is written on it, there is still no investment expertise in it! This applies not only to digital asset managers, but also to traditional asset managers. Most asset managers and fund managers hide behind a market or an index and invest as broadly diversified and index-related as possible. The background to this is the asset manager’s or fund manager’s fear of being worse than the market or the competition. But is this the right approach? Is it possible that an investor entrusts his money to a supposed professional who believes himself not to be better than the market? Managers like to surround themselves with scientific theories on risk management, the added value of diversification and index investing. Complex terms and statistics, expressed in alpha, beta, sharpe and omega ratios, asymmetries and tail risks, should explain to the client what is good for him?

What makes us so successful?

At Estably.com, we focus on the most sustainable and successful strategy in asset management: Value Investing. Its best-known examples are Warren Buffet and Charlie Munger. We rely on companies of which we are convinced. This is why we invest more money in individual companies (= concentrated investment approach). We thus deviate massively from all indices and do not hide behind them. We rely on the individual champions in the indices and avoid the losers. We stand by our convictions and decisions. If we are convinced of a company’s strength, then we also invest a larger share in the company. If we are not convinced by a company, its business model, management or future prospects, then we are not even a small part of it, we are not involved in it at all. If you buy an index, you are also involved in bad companies. Indices largely reflect the average economy of a country or sector. This also means, however, that the investor can never achieve above-average results because he only buys the average: good, medium and bad companies.

 

Estably.com – the big difference to the existing Robo-Advisorn:

Estably.com is a digital asset manager that relies on the experience and expertise of its portfolio management specialists rather than on algorithms and passive index investing. We believe that no algorithm, no artificial intelligence, can judge a company by its business model, managers, ownership structure, strategic direction, sustainable benefits and many other factors. The core competence of asset management must be the successful investment of the assets entrusted to it by the client – even in times of digitalisation.

The core elements of Estably.com and the associated added value for clients are:
1. an understandable and digital customer interaction through its user interface
2. a lower minimum investment compared to traditional asset management
3. reduced costs in comparison to classic asset management
4. superior investment strategy with the experience of a competent investment team

We are not passive asset administrators, but active asset managers!
Estably.com combines the competence of an experienced and successful asset manager with the technical possibilities of the 21st century.

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