Please find the second part of the interview to Pietro Ugazzi, where Compass-AM’s customer relationship manager explains the future scenarios for the financial world.
What are the scenarios of roboadvisory?
«According to our experience, it will take quite a lot of time before roboadvisory reaches a level of professionalism and competence. We believe that one day there will be a mix: the discretion of those investing in my opinion may be reduced but if customers want tailor-made solutions, the presence of man will always be necessary.
Roboadvisors will probably develop passive instruments, like ETFs and long only funds, but everything regarding hedge funds, or other particular strategies, for example where you need a strong background of bottom up analysis, will always need evaluation by humans».
What added value brings an active management to the relationship with the client, compared to ETFs?
«It depends: our funds have quite different features compared to ETFs. They are long biased but we use hedging instruments to reduce volatility. We are focused on the risk weighted performance. For this reason our funds fit perfectly private clients’ portfolios and are interesting also for private bankers and Family Offices.
They could be less attractive for FoF selectors because they choose generally 100% long only funds or ETF as bricks to create their asset allocation. We actually sell funds where we have already done an asset allocation inside the portfolio. We are a small boutique and our products are not comparable with the ones everybody can find in the funds’ supermarket. We don’t follow any fashion, we are focused to give value to our clients mitigating the market risk
What do you think the listing of funds is bringing to the market?
“We actually listed some funds on the Italian stock exchange, but the market is still evolving. Those subscribers who have tried to buy our funds through the banking system they found difficulties. Banks are still fighting against this new type of shares. The path to the Stock Exchange is necessary, but it will take time and a change in culture and last but not least the entry of big players. Even when ETFs were launched their volumes were ridiculous for a certain number of years, then suddenly people started using them and there was a boom. The process for the funds listing, in my opinion, will follow the same path. But it is still a long way to do as banks and financial advisors don’t’ want to be disintermediated. There are still fat margins out there.
Are there any trends, in your field, that affect it negatively?
Not particularly. We manage products according to our skills, one of our mantras is “keep it simple”.
Normally, since we don’t have a sales network, we do not need continuously to hammer the market with the latest products or with a new story telling. We have our own active products and we rely on them. Then we have a number of bespoke products tailored for third-parties. We do not follow any trend, we only follow our skills trying to catch added value for our clients. If we find something interesting outside our range of funds we will select it as well for our clients.
Inside the financial industry we have a special structure. On one side we are Investment Managers of funds and on the other side we manage also HNWI (high net worth Individuals). We don’ have any network of financial advisors and we do not need to renew products all the time. We try to manage well the ones we have. This does not mean that we don’t study new asset classes of course…
Is there something new that at this time you find particularly interesting?
There is a lack in the banking lending system, banks don’t want to do their job anymore. So there is a huge market for new players like “P2P lending” platforms, Factoring platforms that are giving to the market new solutions to the growing demand of debt/credit. We’re studying in this last field to launch innovative products but for the time being I cannot say more than this…
founder and customer relationship manager Compass-AM
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Luncheon presentation by Hedge Invest (Suisse)
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