How It Works

August Invest Solutions (AIS) - Philosophy

AIS is a global investment Robot designed to calibrate global investor solutions. Solutions involving a broad range of asset classes, regions, factors and currencies.

AIS is essentially a research-based set of equations and algorithms founded in unambiguous statistical and philosophical signals from academia. Signals stating that,

  • 1) Investor should always be passive (index) with long-term fundamental focus
  • 2) Investor should optimize and diversify fully at lowest possible costs

While AIS clearly differentiates from active management of global investment or balanced solutions, it is perhaps less clear how AIS differentiates from index investing of global balanced portfolios.

Index Investment – Platform Technology
Conceptual Framework – An Analogy From The Airline Industry

Outside classical bank asset management, these vehicles are often found in the form of App’s or Web platforms. In Denmark a famous platform, called June.dk, is offered by the largest Danish bank, Danske Bank.

Index platforms offered by banks keep secret and monopolize algorithms. They wrap this core-return vehicle into unnecessary costs for investors. Expensive staff, trading, administration, advertising, fancy domiciles etc. All costs that are deducted 1:1 from already low expected investor return.

AIS has opened these algorithms to the public. We have further shaved off all unnecessary costs, so investor is left only with the unavoidable bill (cost) for full diversification through index funds, ETF funds.
For many private investors having their portfolios traded and rebalanced by a bank is a service they like to pay. This service is what you trade off by using AIS. You have to yourself to trade 2 times a year a few ETF securities. For this absence of trading service you have in banks, you will however save around 75% of your yearly costs.

Some years ago, LowFare airliners Norwegian, EasyJet and RyanAir entered the airline industry. They offered similarly to “old” state-owned companies like SAS, Lufthansa, AirFrance etc., travelling people from A to B. The core product. But, at a significant price cut. Travellers as a trade-off now had (and have) to check-in online, buy for coffee on flight and so on.

AIS is of similar structure. We offer with the AIS approach a significant price reduction, but you have to spend 30 minutes 2 times a year, to type in the portfolio in your Net bank or send a file to your bank contact.

What You Risk, Get and Gain

You have NO risk on Investmentexcel.com. You have only market risk which is the price you pay for gaining returns on your portfolio. Using the August Invest Framework will cost around 0,25% p.a. (25bp. p.a.) which is the cost to the ETF distributors. You will save approximately 1,00% p.a. (100bp. p.a.) compared to bank passive balanced solutions and 2,00% p.a. (200bp. p.a.) compared to bank active balanced solutions. Below is a table summarizing annualized costs across products,

The following table visualizes over years (time), the impact of seemingly minor cost-differences. We assume future gross market returns of 8% p.a. nominally in all 3 products. All returns in the table are as such net return to investor after deduction of costs,

The last table translates the percentage net investor returns into market values assuming a start portfolio value of 100.000 today (time=0),

Flow and Framework – Initial Portfolio Creation
Flow and Framework – Rebalancing

FLOW - From User Input to Implementation

On the dates 30.06 and 31.12 in a calendar year all solutions are updated or rebalanced according to results from a new optimization subject to pre-set constraints and conditions. Also, our ETF screening process is activated semi-annually. All drifts in weights following market fluctuations are hence scrutinized. Any changes in-between the built-in rebalancing dates will be updated accordingly on the website. However, only Premium members will be notified by E-mail of any such action.

Example.

If your (physical) portfolio is designed on 30.03 from the August Invest DK Opportune profile, then on 30.06 you can go to the site and see the new August Invest DK Opportune profile. Any changes should be traded to reflect the new optimal profile. Typically, only small changes can be expected. In the “Trading Analysis” menu, you will find free access to a “Guide To Rebalancing”. Both as video and as Excel sheet.