For years, Family Offices have had an edge over individual investors. Analyzing these institutions’ average portfolio composition over the last 20 years, it appears they typically allocate 30% of their overall wealth to Alternative investments, such as Real Estate, Commodities, Private Equity, Art, Collectibles, and other Private Assets.
The reason? Diversification. Stocks and bonds can offer some diversification benefits, but by expanding out to other asset classes, Family Offices have been able to maximize their risk adjusted returns and help weather against all types of market conditions be they economic growth or decline or inflationary and deflationary scenarios.
Fractionalization opens more investment opportunities to the masses
Today, more and more asset classes are offered in fractionalized form. It started many years ago with ETFs which sought to fractionalize exposure to indices.
The same logic was then applied to shares so that investors didn’t need to spend hundreds of dollars on a single share of Tesla but could instead get exposure from as little as $1. Digital assets, such as crypto currencies, also leverage upon this concept of fractionalization to enable access to more investors.
However, it is the world of Alternatives where the biggest opportunity exists for retail investors. These assets have typically been in the purview of a few well-connected and well-funded institutions.
Now, there are over 100 Alternative asset brokers, such as Seedrs or Lendinvest, offering fractionalization of Real Estate, Private Equity, Art, Collectibles, Wine, Farmland and Commodities amongst other possibilities. This means individual investors can now mimic a Family Office portfolio for a fraction of the outlay.
How do you make sense of all the analytics though?
The problems of investing in just stocks and bonds compound once you bring all these new asset classes into the mix. How do you control over-exposure or leverage? What should you compare your overall portfolio performance to?
And how do you assess how your portfolio performance will move going forwards? Given the recent market downturns, understanding current exposures helps investors gauge whether the risk they continue to take suits their tolerances.
Even when factoring in all these investment choices, the market is fragmented across many different brokers, which means monitoring investments separately in different platforms.
Furthermore, even if one had the money to employ a wealth manager, reading their portfolio reports in the hard-to-understand jargon typically used by financial institutions, doesn’t help with transparency or personal education.
A portfolio tracking system that simplifies the jargon
This is where illio steps in. Our system allows the individual investor to bring in their Stocks, Bonds, Funds, Crypto, Real Estate, Collectibles, and other Private Assets into one easy to use platform.
Once illio is populated, users can either utilize our professional grade analytics tool to understand their risk and performance or simply take advantage of our Insights which summarize the key facts about their portfolio without them needing to do the full analysis.
The goal being that any investor can get a quick understanding of how their money moves and why, without needing to be a financial expert.
A first for Online Brokers to improve customer retention
We are the first integrated broker solution that helps your customers aggregate held away investments and provide intuitive analytics within your own platform.
We aim to arm the individual investor with analytics that allow them to make the best decisions they can, while creating opportunities for online platforms to increase time on site and build a unique advantage over competitors. With a consolidated portfolio tool offering, your platform becomes the go to gateway for your customers to see and analyze their total wealth.
We are launching with our first partner, Interactive Brokers, and are seeking other online brokers who wish to join us on our journey of helping the retail investor think like a wealth manager.
If you would like to learn more, please visit us at our booth (105) in the Finance Magnates conference between November 21st and 23rd 2022 or check out our website at www.illio.com
