With Investivity, your assets are custodied under your name at the bank of your choice. All accounts are fully segregated from each other. In addition, if you choose our recommended broker, Interactive Brokers, you’ll benefit from a deposit insurance against default of up to $30 million in value, 300 times more that the usual coverage limit of €100,000 you get at most banks in Europe.
We started Investivity because as individuals working in finance, we grew frustrated with the carelessness banks showed at “managing” our own personal savings.
First, they are very expensive, and worse they try to hide it from you. Their fees often sum up to a total expense of 3% to 5% of your capital each year.
Second, they use all kinds of tricks to sell you a performance that you never see realized on your real account.
Third, they keep you away from your money: with so many layers in their investment value chain, it is hard to stay connected with how your money is used.
It’s high time this changes. Rather than waiting for regulators to finalize their directives and for traditional managers to adapt (cf. MIFID2), we have built Investivity for ourselves and the many people around us who need transparency and fair pricing.
Passive and active investing are frequently opposed.
The proponents of passive management defend it on the observation that different types of active management have failed in the past to overcome higher execution costs and management fees.
Critics of active management also think that approach is more dependent on forecasting quantities that cannot be properly forecasted, which makes it more prone to failure.
Fact is not all types of active investing are made the same, and at Investivity we are well aware of the limitations of certain types of active investing.
This is why we believe there is a third way which goes beyond purely static and passive investing, while using a reactive type of active investing.
Because everything, and especially the unexpected, can happen in the financial markets, a reactive approach is required.
A reactive approach to active investing is one which implies to react in a timely way to market changes, and using an appropriate risk and sizing framework.
It is also focused at its core on asset allocation and hedging, rather than a benchmarked type of investing which provides little benefits at the end on the risk-adjusted performance.
Investivity has developed multiple approaches to risk mitigation, both at the portfolio and single instrument level.
Those approaches build on practical hands on experience of the different types of situations that can arise and create excessive risk exposures.
We would be happy to exchange further with you on that topic, should you wish to learn more about our specific implementation.
The term style can have different meanings. We use it here to qualify the wide-ranging and robust approaches, such as value, momentum, carry and defensive, that have been regrouped under the denomination “style premia”.
For an online introduction to their benefits, you can follow for instance this link documenting what style premia are
When trying to compose a portfolio that is diversified enough, it is recommended to deal with components which dependence over time is more stable.
This is true for statistical reasons (estimating correctly the dependence) and economical reasons (something that can change suddenly in unexpected ways is harder to deal with).
The traditional approach of measuring and using correlation or covariance on asset classes is flawed because dependence can vary a lot and even change sign over time. This is the case for instance in the relationship between equity and bond returns.
Factors or styles, if appropriately defined, lead instead to more stable relationships over time.
Investivity is using the essence and methods of factor investing and style premia applied directly on liquid instruments.
The major innovation we bring lies in the ability to apply those to a broad set of instruments, and above all to create highly personalized and custom portfolios out of them.
The proprietary platform we have designed handles natively liquid assets for dynamic management of positions and capital protection to be handled effectively.
Initial setup includes etfs, stocks and futures and can be extended to other types of liquid assets such as funds.
Advisory mandates and advisors/wealth managers can imprint their own market convictions in our platform, if they wish so.
The ability to smoothly integrate, through a common interface, the outputs of algorithms (used for hedging, sizing and allocation) and your own market convictions is part of what we call “managed advisory”.
Your convictions can be specified and applied to one or multiple portfolios at the same time, and will lead to suggested positions in combination with the styles of your choice.
The outputs can then be controlled, adjusted and modified, before actual generation of orders.
New regulations such as MIFID2 in Europe and FIDLEG in Switzerland reinforce informational duties towards the end client and increase the necessity to document properly investment decisions. They also involve proper suitability and appropriateness assessments for non professional clients.
In order to handle efficiently such new requirements, the natural solution lies in a new type of platform centered around risk management and that use advanced rule-based strategies to augment, rationalize and improve the existing investment processes.
The Investivity platform is unique in that its “augmented investing” algorithms have further been designed from day one to integrate smoothly your own views, convictions and investing styles.
Fulfilling the new regulatory requirements becomes much more natural that way, and can be turned into a competitive advantage.