Katalysen has become a partner of Investimizer, a Chicago-based robo-adviser. Investimizer uses advanced quantitative financial methods and artificial intelligence.
Given that robo-advisers need to construct and rebalance the optimal portfolio for a client, we found it surprising, that vast majority of robo-advisers use outdated and theoretically unsound approaches without consideration of their out-of-sample performance. Most of the actual portfolio optimization methodologies give only lip service to clients’ investment horizon, multiple investment goals, and actual probability of achieving them, while focusing on average metrics and ad-hoc optimization parameters. As illustration, an endowment with a long-term horizon needs different specific optimization processes and risk scenarios, than a portfolio that will be liquidated two years down the road. Therefore, such portfolios require much more sophistication in their construction than the standard risk approach, generation portfolios of basically three kinds, conservation, balanced and growth.
We believe that the time has come that even retail investors should have access to useful portfolio construction and rebalancing that take multiple investment goals and investment-horizon into consideration.Technology makes this possible.
In addition to the unique added value that Investimizer can bring to investors, Katalysen is impressed by the strong theoretical background and practical experience of the founders.