Vancouver-based startup Responsive is launching an AI-driven, active management investment service this August.
They aim to help savvy investors take advantage of hundreds of economic, market, and technical signals to protect and grow their wealth. It’s not a robo-advisor. In fact, the platform seems to be positioning itself as a competitor to the growing number of robo-advisors that offer passive investment options by automating aspects of portfolio management.
Passive investing ignores the data, Responsive CEO Davyde Wachell said. Robo-advisors use passive portfolio management to buy and hold a fixed balance of exchange-traded funds (ETFs). Meanwhile, Responsive uses a data-rich artificial intelligence (AI) approach. The data guides Responsive’s investment team in their decision-making.
“There’s no substitute for learning about what you’re doing and also doing your own homework.”
– Davyde Wachell
More investors are looking for smart, AI-driven recommendations in their investments that match the convenience of Amazon’s product recommendations or Apple’s digital assistants. “It is a good time for equities, versus investing in bonds?” Wachell asks rhetorically. “Europe, versus emerging markets?” The Responsive platform looks at current data signals, rather than focusing on historical outcomes in the market.
Passive management can be a winning strategy when you’ve had a seven-year bull market, Wachell says. “But I’d be concerned for new investors being told they’re getting into a Nobel Prize-winning management style, which won the Nobel Prize in 1952.”
He cautions that investors may get confused by terminology around robo-advisors, thinking that ‘algorithmic’ means smart, when it really creates results that are automatic, based on historical data. “Your dishwasher can be automatic… I’m not saying automated investing is bad; it’s not a problem of selling this thing (robo-advisory), but communicating effectively what it is.”
Smarter, more effective investing tools guided by more data may sound enticing to investors looking to up their game – but Wachell cautions those who are just exploring their options to really dig into what technology can deliver. “There’s no substitute for learning about what you’re doing and also doing your own homework,” he said. “If someone comes to you saying, I’ve got a machine for making you money’, you should get your guard up. I would invite anyone thinking of going with us to do their research, contact us and find out everything they can before they get started.”
The Responsive AI platform is being used to manage $1.2 billion in institutional and private wealth, by partner Genus Capital Management.