Institutional investors have actively added alternative avenues for investment during the past few decades. This includes the likes of real assets, private equity, hedge funds, commodities and other variety of options, which they add to their existing portfolio. This inventiveness actually saves them from the threat of volatility that plagues public securities and increases their profit margins at the same time.
Compared to the conventional 60/40 split that was undertaken by investors in private portfolios, the institutions segment them into uncorrelated asset classes. A large percentage of these target alternative options. For instance, Harvard and Yale now hold 50% of their investments in alternative sectors, too.
The Fintech wave has changed all that. Now, several tech-oriented platforms offer investors a way around common roadblocks, and offer great convenience and ease of use. Digital platforms are nothing in a world dominated by large-scale institutions and conventional banking systems.
This text will examine a select few avenues that have changed the financial investment on its head:
Digital Brokerage
It is a subsection of wealthtech in the Fintech sector. Nevertheless, it is growing steadily and capturing market share from established players, courtesy of rising interest in digital assets and cryptocurrencies.
Digital platforms have disrupted the old-fashioned brokerage houses and reduced fees remarkably. With them leading the way, the days of in-person dealing between the client and broker is soon on its way out. Forward-thinking brokers will inadvertently adopt latest systems to come to terms with changing practices. Otherwise, their growth projections may suffer.
This will eventually lead to a broader scale of structural changes in this industry for the coming years. On the other hand, digital brokerage minimizes paperwork and person-to-person hassle and broadens potential for growth. As a result, this complete overhaul of the system actually makes life easier for all investors and brokers.
Thus, the traditional brokers face a ‘do or die’ situation as digital brokerage entities move in with rapid innovation, lower fees and better user experience.
Micro-investing
…. is another exciting arena in the Fintech arena ripe with new possibilities. It provides an option for the retail investors to plan and save for the future. The platforms in this sector changes the game for conventional investment practices by giving them the possibility to do so in greater frequency.
With this, they lower… their contribution minimums and helps them accumulate wealth as time progresses. Digital platforms in this sector use a subscription model since management and transaction fees can add a strain on the prospective investors. Or even better, some of them have no fees.
Micro-investing makes saving extremely easy. The set-it-and forget-it strategy is convenient for most newbies and it doesn’t need strategic maneuvers at all. A broad variety of apps in this field in the market offers consumers different investment options.
Iban Wallet is an option that allows investors to make investments in multiple accounts and benefit from projected fixed yearly returns. These returns aim to be from 2.5% to 6% and interests are paid daily.
Instant liquidity
Safety
Fixed interest rates
Bottom Line
Digital platforms have carved a niche for themselves. They have not only gained acceptance, but also created tremendous influence on the market. Fund sponsors are now under pressure to redesign their products to make them more RIA friendly, with lower fees and minimums, at the same time
Needless to say, the next 5 years will bring even more changes and opportunities.
