Unlike other Robo-advisors arty does not take custody of your money and invest it for you. Instead, arty offers you advice which you can execute yourself via your own brokerage account. Today we explore the pros and cons of this approach.
- This arrangement is good for people who like to stay in control. You are aware of every trade; you validate every decision and ultimately pull the trigger yourself. This means you can also opt out of a particular trade if you don’t like it and you don’t have to worry that arty is investing in a risky or unusual way.
- The money stays in your own account. You can rest assured that your money has not been sent anywhere suspicious, it is not being processed through intermediate bank accounts, it stays exactly where you can see it.
- You can trade when you want. arty rebalances the portfolio once per month, but you don’t have to trade when arty trades, you can execute the instructions at your convenience. The most important thing is that you achieve arty’s recommended allocations or weights for each instrument.
- You may like the idea of managing your own portfolio but you’re not sure what to buy, when to buy, when to sell or what weight to give each instrument. With arty your trading is self-directed but with an artificial intelligence research tool guiding you.
- Trading is fun! A lot of us have seen Hollywood finance movies set in the front office of banks or hedge funds or on busy exchange floors. And while they usually end in disaster, it does look like a lot of fun! So why let someone else do the good part?
Now the Cons…
- It takes time and effort to execute arty’s trades. You’re busy, you may forget to do it, it’s a hassle. arty understands. This is one of the reasons why trades are only generated once per month.
- It can be complicated. arty has selected several specialist ETFs, it can be hard to know what is in them and why they were selected. This is a key part of the investment approach. arty is able to keep the volatility of your portfolio, and therefore the risk, down by selecting instruments that are uncorrelated with each other. This means that since many of the traditional markets are correlated, arty has to select some more esoteric products to achieve this. But don’t worry, even though these products are less well known, they are no less safe or less profitable than the S&P or Apple or Microsoft shares. There are also many high-growth sectors such as cyber security or Taiwanese equities.
- It can be hard to find these instruments on the platform, they may not even be listed. It is true that many of the ETFs are uncommon investments and not every broker has them. If this is the case, then you can request that your broker add them to the platform, which they will happily do.
- You must be careful to select the right one. ETFs can differ in small, subtle ways. The underlying investment is the same but for example the currency could be different, it may distribute dividends and coupons instead of accumulating them (arty always selects accumulating ETFs), it may be a different provider or listed on a different exchange. The best way to find the right one is to use the ISIN code which is unique for each instrument. While it is better to match your portfolio to arty’s exactly, don’t worry if you make a mistake, it may not have a huge impact and it can always be fixed later.
- What is an ETF anyway? Let us allow the nice people at Investopedia to explain that one: Exchange Traded Fund (ETF).
In conclusion, while there are some tricky steps that you have to navigate, particularly at the beginning, managing your own portfolio with arty’s guidance is ideal for people who like to stay in control and see what’s happening with their money.