Singapore will play host to yet another digital advisory platform catering to the mass affluent and high net worth segment, Citywire Asia can reveal.
Launching on August 10, Kristal.AI is an online asset management platform that gives investors access to independent advisers and portfolio managers. Similar to an independent financial adviser, investors can pick and choose from the various strategies, called ‘Kristals’, of ex-traders and fund managers.
‘It is meant to service mass affluent clients who are not getting the service that they want today from their wealth managers and private bankers -- partly because of cost reasons and other inefficiency reasons,’ Asheesh Chanda, co-founder and co-CIO of the platform told Citywire Asia.
Kristal.AI is already present in Hong Kong and India. There are currently 17 accredited investors on the platform.
In Singapore it will operate under a capital markets licence, albeit one restricted by the Monetary Authority of Singapore’s ‘Regulatory Sandbox’ requirements. The sandbox, introduced in November 2016, is a testing ground for new technology, giving start-ups the ability to ‘go live’ and conduct actual business while having a restricted user base for a limited amount of time.
‘We expect to exit the sandbox in nine months and then we have to decide what kind of licence we take. Right now, we have some retail and high net worth customers, and the idea is to develop the [machine learning] algorithm further,’ said Chanda.
The firm has raised $1.7 million in funding that includes 20 high net worth investors, and is in talks with venture capital firms.
With a minimum investment amount of $1,000, the discretionary portfolios are managed by Kristal.AI’s team of quant analysts who curate the ideas provided by the independent advisers. After the machine learning algorithm is developed, it will recommend the strategies to the analysts, who will then implement it in client portfolios.
Once the portfolios are up and running, clients can check the positions and performance on a mobile app.
The platform gives investors access to exchange-traded investments across equities, bonds, forex, options and futures.
The fees vary widely depending on the strategies chosen by the investor. ‘Bond Kristals are 0.1% per annum but if someone is going into an option-driven strategy, there could be a hedge fund- like structure of 1% and 10% with hurdles, watermarks etc,’ said the former J.P. Morgan structurer, who also manages a strategy on the platform.
The execution of trades is done by Interactive and Saxo Bank in Singapore and Hong Kong, which act as custodians. Kristal.AI does the KYC and onboarding checks if the client is not an existing customer of the online brokerages.
It currently has two compliance experts in its team of 25 spread across India, Hong Kong and Singapore.
Aside from reaching out to high net worth individuals, Chanda is also targeting wealthy families through potential partnerships with multi-family offices and independent asset managers for co-branding the digital platform or creating fund-of-funds by using an asset allocation algorithm.
‘We are also in nascent talks with ex-private bankers who want to go independent,’ he said.