Active investment management typically refers to an investment portfolio overseen by a manager, who constantly trades assets to outperform their market benchmark. Portfolio managers make decisions based on expected price movements or macro-economic predictions or both. For this activity, the manager will charge a fee. Passive investment strategies, which include ETFs, aim to replicate the risk and return of a designated market index and are typically much cheaper than active funds.
Active funds dominated the industry until the start of the millennium. However, there is growing evidence that actively managed funds do not beat the market, and particularly not after transaction costs and fees.
Exo is not an active manager in the traditional sense of the word as we do not make adjustments to your portfolio based on opinions on the current or predicted future performance of certain asset classes. Instead, our risk management algorithms will continuously manage your portfolio of ETFs in accordance with your declared risk preference and predominantly based on observed market volatility.
So technically, your Exo portfolio will be actively managed, but by sophisticated technology rather than humans, relying on passive investments like ETFs and in line with predictions on risk rather than returns, which we believe is a more solid and accurate basis of achieving performance.