Magazine article Modern Trader

Even the Robots Are Getting Active

Magazine article Modern Trader

Even the Robots Are Getting Active

Article excerpt

The rise of Robo-advisers has dramatically affected the broader debate about active and vill passive management. Robo-advising has tar1 1 geted a perceived vulnerability among active ^^^Ifenagement: Fees. The combination of lower fees and the perception of strong passive performance have boosted assets in the robo-advising space significantly. But the next generation of robo-advising aims to adopt the-best of both worlds by providing active management strategies. Modern Trader sat down with Walt Vester, a former director at BlackRock group, who founded robo-adviser Huygens Capital in 2011.

Modern Trader: How did Huygens get started?

Walter Vester: I founded Huygens in 2011, after a decade of working in alternative investments, investment management and corporate finance. When I founded the firm it was because I saw a market need for an alternative investment strategy that was systematic, intuitive, transparent and liquid. We started out marketing our strategies to institutional and wealthy investors. Since 2011, we've observed the explosive growth of retail alternatives and we realized our strategies are perfect for that market and well-suited to the robo-advisor delivery channel. So in 2014 we Idecidedj to offer our products via a robo-advisory service and we launched it this summer.

MT: What is the current need in Robo?

WV: Because of the Internet on-boarding and service delivery, today's robo advisors are systematic, accessible, fast, cheap and liquid. However, they generally employ an undifferentiated investment management process. They build a diversified multi-asset portfolio for the client and then periodically rebalance it to keep its asset allocation static. This is an approach for delivering acceptable, if unremarkable, returns.

MT: Are there any limitations to Robo-advisors?

WV: "Betterment, Wealthfront and Schwab Intelligent Portfolios blazed the trail and provide a product that the market wants. …

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