PALO ALTO, Calif., Feb. 25, 2016 -- In the crowded robo-advisor market new players are born every month. After initial success of Wealthfront and Betterment, large financial institutions such as Schwab, Vanguard and BlackRock have joined the trend and are developing their own robo-advisor platforms or acquiring existing players. With a few exceptions, these robo-advisors use similar approaches: ETFs that track well-known indexes primarily from stock market and tax-harvesting.
IncomeClub has launched web-based investment management services in January 2016 and offers a clear alternative to existing offerings. This new FinTech company provides cost-effective bond investing with online convenience focusing on individual bonds. IncomeClub's platform serves investors who seek conservative investment strategies, with low fees and transaction costs.
Current complexity of bond market, scant liquidity and large denominations made conservative investors allocating assets into bond funds. However, unlike bond funds, individual bonds could provide predictable return, as interest payments are fixed and issuers must return the principal back at maturity. Sergey Sanko, IncomeClub's Co-Founder and CEO, came up with the idea of IncomeClub to accomplish one great mission: eliminate complexity of individual bond investing. "Savings accounts only pay a fraction of what's needed to keep up with inflation, investing in the stock market does nothing to guarantee returns, even bond funds don't guarantee anything, but individual bonds do," Sanko said.
Palo Alto-based startup applies the investment approach using the Dedicated Portfolio Theory. According to the theory, the goal is building the portfolio for generating predictable future cash inflows. IncomeClub's algorithms use the bonds allocation model based on the combination of an individual's risk profile and financial time horizon, and pick individual bonds directly from various marketplaces. Instead of using the traditional method of finding bonds for investments, the IncomeClub's Smart Beta approach chooses bonds based on fundamental criteria. The service aims to find available bonds on the markets with the best risk-rewards characteristics.
IncomeClub targets millennials who have grown up with software and demand for online services. Recent findings from FinaMetrica, a psychometric firm from Australia, show that the US millennials were only comfortable having 43% to 63% of their portfolios in equities. "Interesting how the industry, including robo-advisors, misinterpreted millennials by considering them less risk reluctant than baby-boomers. " added IncomeClub's Co-Founder, Vlad Kozlov.
For self-directed investors, the "Self-Select" platform feature will be released later in 2016. The feature will allow users to take over the control based on bonds pre-selection and advice.
IncomeClub is a registered investment advisor with the SEC with headquarters in Palo Alto, CA. The Company's mission is to make fixed-income investing simple and efficient. Incomeclub offers unique benefits of owning individual bonds, with the simplicity of mutual funds. The company charges 0.25% on AUM below $100,000, and just 0.2% on assets above $100,000. Clients' assets are held with custodian Interactive Brokers, which is rated as a Best Online Broker four years in a row by Barron's ranking.