Robin must show if he can handle chaos

Robin must show if he can handle chaos

In the future, Deutsche Bank will offer more services for less money. Thanks to Robin. This is the name of the institute’s new digital asset management. From now on, customers can complete them online.

Basically, it is the same product that has been sold in the branches for years by the bank’s securities advisers. Robin is a mixed fund that uses exchange-traded index funds (ETFs) to reflect Ulrich Stephan’s market opinion.

He is the top investment strategist of the bank’s private and corporate banking business. The weight of stocks, bonds and commodities changes depending on how Stephan estimates the further development on the stock exchanges.

At Robin, however, there is also a digital component, an algorithm that always has an eye on the risks in the markets and, above all, the personal risk appetite of each customer when composing the portfolio – they can choose between 16 risk levels.

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Depending on how much loss he can overcome, at least temporarily, the algorithm automatically changes the weights of the individual ETFs. “Man and machine come together here,” says Markus Pertlwieser, head of Digital at the bank’s private and corporate customer business, at the presentation of the new product.

Save on fees

Some store customers will ask themselves whether they would like to have the ETF fund of funds sold to them by their advisor for even longer. Around four billion euros are invested in the “Deutsche Bank Best Allocation”products. With these classic ETF funds of funds, the bank charges fees of around 1.8 percent per year, plus a one-time issue surcharge. On the other hand, the supposedly more powerful Robin – the combination of Ulrich Stephan and the algorithm – charges a maximum of 1.25 percent per year.

Rarely have the benefits that digitization can bring to savers been so clear. How good Robin is compared to other digital asset managers that already exist on the market will have to be determined. Deutsche Bank is the first major bank in Germany to attract customers with a product also called Robo-Advisor.

But far from the first provider. While it was initially primarily start-ups such as Ginmon, Scalable Capital, Vaamo and Whitebox that dabbled in the field, increasingly established banks see it as the future of their own securities consulting. The Volks – und Raiffeisenbanken have already launched Visualvest a long time ago, the Commerzbank subsidiary Comdirect came with Cominvest in May.

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All banks face the same problems: Not least due to the high requirements for securities consulting, which the legislator stipulates, the direct conversation with the customer is only worthwhile with high investment amounts – at least 50.000 euros should already be.

With digital asset management, the costs for banks are significantly lower, which is why you can earn money there with smaller sums and lower fees. Robo-advisors are ultimately designed to eliminate the need for traditional fund managers and securities advisors.

Minimum investment amount of 5000 Euro

The customer answers questions about his person on the screen, including age, return target, disposable income. Then, in the next step, the computer recommends a standard portfolio with low-cost index funds that supposedly fits his risk appetite. If the prices on the exchanges fluctuate, the composition is automatically adjusted-for example, equity funds are sold, bond funds are bought for this. The private investor does not pay for each fund individually, but a flat annual fee.

With the minimum investment amount of 5000 euros, the bank is in the range of other digital managers on the market. In terms of fees, Deutsche Bank ranks in the upper range. Every year, Robin customers have to reckon with fund costs of an average of 0.25 percent. In addition, there is the fee for asset management. Depending on the investment amount, this is between 0.8 and one percent per year.

So far, the quality is hardly assessable

The investment strategy is strongly reminiscent of that of the Munich – based company Scalable Capital, which now manages more than half a billion euros digitally, not least thanks to the cooperation with the direct bank ING Diba-this is enough for the position of market leader in the still young area.

At Deutsche Bank, too, risk is managed using the so-called value-at-risk approach. The deposit is compiled in such a way that the maximum loss that the customer is willing to accept on a day is not exceeded with a probability of 95 percent. Other robo-advisors only adjust the depots at fixed times, for example once a year. Which model gives the better results, is controversial.

In any case, the performance of those robo-advisors who have been on the market for some time now hardly allows conclusions about their quality. In the real money test of the Internet platform if the providers that have been on the market since May 2016 have been close together so far – the performance since then has been between ten and almost 14 percent. They owe this to the overall positive development on the capital markets. Only when there is once again a stock market turmoil, it will turn out which computer program keeps the minus of the deposit the smallest.

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