A new robo-advice service has just launched that will allow investors to get easier access to the bond market. Traditionally UK traders and investors have always had something of a cultural bias towards equities, with bond holdings limited to the UK gilts market (government debt).
Robowise, which is launched today, allows investors to choose between Balanced and Adventurous risk profiles – Balanced investors will focus on investment grade and senior secured bonds, while Adventurous investors will be exposed to high yield and subordinated bonds.
Users of Robowise will able to personalise their bond portfolios by filtering out specific companies or industry sectors, giving them a higher level of customisation than many other robo advice solutions on the market at the moment.
Once activated, Robowise buys and sells different bonds top rebalance investors’ portfolios on a continual basis to maintain diversification. Cash arising from the repayment of bonds may be reinvested, including in new bonds becoming available through WiseAlpha.
WiseAlpha was launched in 2016 by Rezaah Ahmad, who was previously a leveraged finance specialist with Deutsche Bank. It is an FCA-authorised digital bond market, which offers retail investors acess to senior secure bonds, high yield bonds and other corporate debt instruments. This market was previously only available to institutions such as pension funds, investment banks, or very wealthy individuals.
Users of Robowise may choose whether to reinvest their interest payments or simply withdraw them. At all times, investors remain fully in control and may adjust the settings or indeed turn Robowise on or off. This flexible approach to bond investing starkly contrasts with the relatively opaque nature of bond funds because it gives investors complete discretion on how they trade bond markets for the day-to-day portfolio management and cash management requirements.
The WiseAlpha market gives investors the ability to earn income of between 3% and 15% per annum, buying the bonds of some of the most respected companies in the UK, including Virgin Media and Ocado.
“This is a very important milestone,” says Ahmad. “First we opened up this wonderful asset class, with its broad spectrum of returns, to the everyday investor. Now we’re empowering them to pre-select and put their portfolios on autopilot, with advanced tools previously only available to sophisticated institutions and global banks.”
Ahmad reckons that WiseAlpha will prompt a shift in investor behaviour, with more retail investors prepared to look at the corporate debt market rather than P2P lending strategies or active equity trading.