Financial health depends to a large extent on the informed decisions that are made in the present; For this reason, when planning how savings can grow, it is important to identify the products that best suit each person’s goals and risk profile.
Through technology, innovative investment alternatives have emerged. Automation, online service and objectivity, exempt from human error, offered by the so-called ‘robo advisor’ they are part of a reality that is gaining ground among those who wish to give their savings a new variable investment option.
“The automated investment managers –or better known as ‘robo advisor’– They are a type of robotic financial advisor that is in charge of investing, through online platforms, with highly automated systems”says Adriana Cuéllar, country manager of Libertex. Through the use of algorithms, they offer the opening of automated operations, which invest in investment funds (usually these being index funds).
How do robo advisors work?
The specialist explains that it is an automated investment based on algorithms that, through a survey, determine your investor profile and offer you a diversified portfolio with which to start saving from the outset. “The ‘robo advisors’ are an excellent option for people who want to give their savings a new type of management, but who do not have the knowledge or the time necessary to analyze the investment market”points out.
Once these portfolios are established, the robo advisor takes care of their management. “This involves carrying out a series of automatic rebalancing to ensure that the optimal weights of each asset class that is part of the portfolio are maintained, taking into account the fluctuations of the market”says Cuellar. That is to say, that the equitable distribution of capital between the different assets is preserved; so that the risk and return of a portfolio are balanced in the best possible way.
Advantages of ‘robo advisors’
The growth of automated managers is based on a series of clear and specific advantages. The Libertex specialist explains 3 strengths of investing in ‘robo advisor’:
● Reduced costs. It is a cheap option to invest for two reasons. On the one hand, the automated manager works through algorithms, which limits the need for a large team of analysts and investment experts; and on the other hand, most invest through index funds and passive management ETFs (variable income investment strategy, whose objective is to replicate the evolution of a certain stock market index), which have fewer commissions than traditional funds.
● Investment strategy. It is based on passive (or indexed) management products. It is about investing in low-cost products that replicate stock market indices and in the long term that have given greater profitability. “At Libertex we have a ‘robo advisor’ called Pirata Bot –inspired by the Peruvian soccer player and brand ambassador, Hernán Barcos–, which has a group of portfolios made up of 7 – 52 robots that operate with various currency pairs the 24 hours a day”says Cuellar.
● Transparency. The ‘robo advisor’ improve the accessibility and availability of information thanks to its online distribution. With them we can access our portfolio at any time and any day, carrying out 100% of the procedures online. Similarly, most provide clear and transparent information on costs, commissions and returns.
“Automated investing provides products based on high technology, without the need for extensive investment knowledge. However, it is still extremely important to understand the financial products in which one invests”points out Cuéllar.
