Digital investment manager Scalable Capital has doubled its assets under management (AUM) in the past three months and now manages €200 million on behalf of its clients. The strong growth in AUM marks Scalable Capital as one of the fastest-growing fintech companies in Europe.
Adam French, Founder and CEO of Scalable Capital.
“Our assets are growing by more than €1m per day,” said Adam French, Founder and CEO of Scalable Capital. “Our service has really struck a chord with frustrated retail investors who know that they should be making their money work harder but lack the time or expertise to manage their investments on their own, or who are frustrated with the high costs of traditional solutions. We are addressing this gap with our cost-efficient, technology-driven and intelligent wealth management proposition.”
Only a year since its launch, Scalable Capital now operates in three countries (Germany, UK and Austria) and manages more than €200m in assets for 5,000 clients. The firm went live in the UK in summer 2016. In January 2017, the fintech start-up began a collaboration with Siemens Private Finance which selected Scalable Capital as its exclusive partner to offer a wealth management solution to Siemens employees in Germany.
The average value of a portfolio with Scalable Capital is €40,000.
The firm’s operational process involves an initial evaluation of its client’s risk tolerance, after which a tailor-made investment portfolio is constructed purely from ETFs, each targeting a specific asset class including equities, government bonds, corporate bonds, covered bonds, commodities, real estate and cash. The potential universe of ETFs invests in approximately 8,000 securities across 90 countries with each portfolio monitoring country and sector allocations to promote effective diversification.
The firm focuses on ensuring the risk preferences of its investors are met at all times, including during abnormal ‘stressed’ market conditions. One way the company achieves this is through using value-at-risk metrics at the core of its investment decisions. Value-at-risk analysis accounts for all previous market conditions and provides the investor with a concrete amount or percentage of their portfolio at risk of loss for a given probability (usually 5%) over the following year. .
This strategy has proven popular with more sophisticated investors – Scalable reports clients typically have a strong educational background, with more than 90% having an academic degree and around two thirds possessing a background in economics, technology or engineering. Bankers make up the largest occupation demographic for clients at approximately 20%.
The UK has seen fast growth in the digital wealth management space with firms such as ETFmatic, MoneyFarm, Netwealth, Nutmeg, Moola and Wealthify already operating in the country.