Robo-advice  

Robo boss predicts death of investment funds

Robo boss predicts death of investment funds

Increasing use of automation could lead to the death of investment funds, the founder of a robo-adviser has said.

Ella Rabener, chief marketing officer and co-founder of Scalable Capital, said funds could become obsolete due to increasing use of automation and fractional shares.

She said the use of automation would also allow portfolios to be managed without the intervention of a fund manager.

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Speaking at the Personal Investment Management & Financial Advice Association (Pimfa) fintech conference today (12 September), she said: "Using technology you might be able in the future to create bespoke portfolios for individuals even if they invest as little as £100 or £50.

"You can do fractional share trading and you can create a portfolio for them. You don't necessarily need a fund manager to do that."

She added: "There will still be investment themes or strategies, whether it is factor investing, that people will want to get access to, but in the sense of a fund as a vehicle that allows people to pool money and access certain markets, I am not sure we will need that anymore."

Earlier this year Scalable Capital passed through the €1bn (£890m) of assets threshold after launching in 2016.

Ms Rabener said the company was interested in developments in the ethical investing market, but she said there would need to be technological developments for Scalable Capital to commit to this market.

She said at the moment companies offering ethical portfolios were giving investors the opportunity to invest, but without being able to determine how much they were giving up in terms of investment returns.

Ms Rabener said: "If you cannot tell clients what the implications are, you are offering them a feel good investment and possibly endangering their investment and their pension.

"We want to be able to create much more meaningful socially responsible investment portfolios.

"This is a development we are particularly excited about and something we want to be part of."

She said this would become possible because technology would offer increasing transparency and allow investors to isolate individual stocks which they consider unethical.

damian.fantato@ft.com