December 15, 2020 5 minutes, 51 seconds read

Let an ETF Robot manage your portfolio – for free!

15-12-2020 By Thomas Peter Clausen, CEO

Ubanking.dk is an interactive User-driven platform for building with professional tools those future wealth plans, today only expensively offered in banks. It’s essentially an API solution for investors within-build management of asset classes, currencies and ETF’s.

User signs up, select country, answers a few questions and enters a Dashboard and associated TradeView. From here all details are available for mail and reports. Mails are sent out on changes to User portfolios

Ubanking.dk global investment solutions are founded on a broad set of ETF asset classes for bonds and equities. All with 100% diversification, optimized structure and highest expected return possible for a given risk.

Most often these wealth plans or portfolio constructions, can only be made in headquarters of banks by highly skilled PhD’s.

Ubanking.dk has calibrated all these smart professional tools into a user-friendly setup for Users or investors of all levels to intuitively apply.

The platform is a dynamic engine that works with current market expectations of risk and return. The engine is pre-designed (the “auto” function) to produce a set of solutions that all solve the 4 challenges above.

User can go on “manual” and deviate should subjective expectations be relevant. Say, the system uses 6% p.a. on US stocks and User believes 10% p.a. on a 3 year horizon, then the system allows the 10% in the analysis.

With Ubanking.dk the current investment advantage of professionals versus private investors is hence reduced to a flip-of-a-coin.

Randomness.

Ubanking.dk versus other platforms

Many investment platforms today available for investors on stocks, mutual funds and ETF’s, are essentially not investment platforms.

They are trading platforms.

In most cases, products can be bought/sold, portfolios viewed and in a few very sophisticated cases, a portfolio is even possible to User-construct from a given universe of stocks or funds.

However, these platforms don’t solve the 4 core documented challenges that particularly private investors have.

A. The challenge of Underdiversification

The biggest challenge by far for private investors, is the lack of diversification. Even in simple portfolios of stocks, where investors across countries have very narrow portfolios, with around 2! stocks on average.

This causes a large foregone return, as too much risk is taken for too little return. In Denmark, Professor Rangvid (2019) argued that the aggregate cost of these losses are so big it can be measured on a macroeconomic scale. Clausen (2020) demonstrated how ETF’s can be used to resolve the diversification issue in a simple setting.

Also the diversification becomes a substantial problem as private investors often have a strong local home-bias in stocks. So, they don’t obtain across-country and even in some cases across-industry diversification.

B. The challenge of asset class optimization

Private investors have no idea on how to combine assets. Even following asset classes Funds and buying according to market cap is not correct. We hear this often from private investors, that “I will just buy according to the weights in the index”. That’s not optimization. That’s not finance.

C. The challenge of costs in Active Funds

Whilst the expensive active industry is still by far the largest in the market, its relative size is dramatically decreasing.

ETF’s and indexed Mutual Funds are gaining strong momentum.

Albeit, at least 10 years too late.

For, it has been empirically and theoretically known for decades, that active managers cannot beat an index when performance is adjusted for luck.

Yet, a few global and local market managers, like Warren Buffet in the US, with a successful track record, meanwhile have kept the active industry warm.

Why?

Their results have somehow been used as evidence against index management.

D. The challenge of identifying appropriate Funds

Even if investor identified a mix of asset classes, then what to buy? An even if investors refrain from across funds, then what to buy? etc etc. It’s very complicated to identify the appropriate funds to cover the asset classes.

Entering the Dashboard and TradeView universe

Following User’s country selection and sign-up (first-time), User is asked to answer 3 questions and select a risk-profile. After this, an initial portfolio is completely build and shown in the combined environment of the Dashboard and TradeView.

These two windows work dynamically and interactively, where the TradeView at any time, mirrors actions taken on the portfolio construction in the DB.

In TradeView User can create advanced PDF reports with all trading details. Also, User can sent to E-mail the trade ticket to herself or a bank for execution.

In the Dashboard User can at any time switch between the already system-optimized and defined global solutions and see the difference on several parameters like expected return, risk etc.

The Dashboard itself works as an input-output mechanism where User can change invested amount, savings, horizon, return, stocks, ETF’s etc. and view numbers and charts on how the optimized portfolio dynamically looks.

Once User is satisfied either with the standard solution or the User-changed solution the TradeView can be visited and reports or mails created.

User can enter the Dashboard and Trade View for free and select and view the ETF portfolio that is currently in the system as market-expectations optimized.

Several tools and options are available but not all for free though. For User to personalize market expectations og maybe stocks, upgrade is required.

Free tools to available

  1. Selected country and currency risk-profile ETF portfolio. As default User can select between risk-profiles spanning from low to very-high risk in the ETF universe.
  2. Investment amount. User can enter the right amount or other amounts and see the impact on all key figures over time.
  3. Investment horizont. User can enter right horizon from 1months to 3 years or any choice to view impact.
  4. Bonds activation. User can select NOT to have bonds in the system portfolio. For many reasons private investors do not like bonds.
  5. Charts. All asset classes are dynamically updated. User wealth plan is plotted over time.
  6. Full access to all portfolio details in TradeView, as amount, weight, ISIN code, ETF name, currency etc.  

Upgrade payment tools to available (premium)

  1. Bonds activation. User can select NOT to have bonds in the system portfolio. For many reasons private investors do not like bonds.
  2. Modify global market return. User can enter subjective view of global equity return and view impact.
  3. Modify local market return. User can enter subjective views of local equity market return and view impact.
  4. Savings plan. User can enter an expected monthly cashflow contribution to add to the portfolio.
  5. Dissavings plan normal. User can enter an expected monthly cashflow outflow to subtract from the portfolio.
  6. Dissavings retirement. User can enter expected “death” date can have the system calculate the exact possible monthly outflow in order to get to 0 market value in the end.
  7. The GRI activation. User can enter a future desired wealth level in his currency, e.g. USD 200.000. Then a probability is calculated to reach this amount or higher. By changing the weights (and hence risk) User can then see what it takes to reach her goal. The trade-off between risk and return.

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