In Top 11 Trends of the Robo Advisor Industry (September 2016), industry experts discuss the current trends that are developing in the Robo Advisor space. Some are obvious – the rising impact of regulations in the wake of the Department of Labor’s new fiduciary rules and the move to mobile devices for the delivery of account information and user interaction. And, some are not so obvious, yet, just as impactful. Dr. Kenneth Gustin of Chartis Research Ltd. Says,
… in the future, you’ll find a variety of investing styles available from the Robo Advisor, not just a passive, index-fund investment approach. Greater sophistication in the technology for trade analysis, plus back-testing of strategies, will drive these styles forward.”
We agree with Dr. Gustin. Today, nearly all Robo Advisors engage in a passive index-fund approach for their clients. In our experience, this rather simple method has often underperformed the market and led to significant drawdowns in client accounts.
OmniFunds is focused on Probability-Based Investing through the analysis of chart data and inter-market relationships. This focus has already created fund management approaches that significantly out-perform the portfolios offered by most Robo Advisors.
We believe that returns matter to clients a lot more than most Robo Advisors seem to be willing to admit. As users scrutinize their returns, Robo Advisors will begin attempting to gain an edge. It is our belief that the only way to consistently out-perform the market is to carefully select securities that have a high probability of upward movement in the next timeframe (month, quarter, etc.).
Nirvana Systems, Inc., the research and development organization that is building the OmniFunds technology, is currently testing Artificial Intelligence Probability metrics designed to maximize gains and minimize “pullbacks” also commonly known as “draw downs” even more than current methods. These new funds are expected to be available early in Q1 of 2017.