Rise of the robot fund managers
Sarwa in Dubai and Werthstein in Switzerland are using algorithms to design customised portfolios
a fund manager to pick stocks, is not only more expensive [they collect a management fee] but also less effective than buying funds that track the market,” Chahwan said.
US equity funds
About 93 per cent of actively managed US equity funds underperformed their benchmark in 2016, Chahwan claims, and Sarwa said they focus on passive An algorithm is a specific set of clearly defined instructions aimed to carry out a task or process. Algorithmic trading is the process of using computers programmed to follow a defined set of instructions for placing a trade in order to generate profits at a speed and frequency that is impossible for a human trader.
The defined sets of rules are based on timing, price, quantity or any mathematical model. Apart from profit opportunities for the trader, algorithmic trading makes markets more liquid and makes trading more systematic by ruling out emotional human impacts on trading activities.
For instance, a trader could follow these simple trade criteria: Buy 50 shares of a stock when its 50-day moving average goes above the 200-day moving average
Sell shares of the stock when its 50-day moving average goes below the 200-day moving average.
Benefits
investing in portfolios built exclusively on low cost and better performing ETFs.
“We have a one simple low management fee, while fund managers typically charge at least twice as much and have hidden fees.
“At Sarwa, there are no rebalancing fees, no account transfer fees, no trading fees, no commissions. We’re able to charge a low fee by leveraging
Managing director, Werthstein
technology to automate processes. We do not pay our advisers commissions. We also don’t have a huge pile of paper and expensive real estate, so we’re able to shift the savings to our customers,” he added. The minimum amount that an investor can put in is $500.