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Investors in Germany used to have limited options in terms of where to invest their money for low fees. However, with the recent advancements in financial technologies, robo advisors have become more popular in the country. One of the largest options is Ginmom.
Ginmon provides clients with intelligent exchange traded fund (ETF) portfolios. Using state of the art technologies and mathematically based algorithms, client funds are automatically invested, managed, diversified and tax optimised to provide the best opportunity for good returns.
Risk management is provided using an algorithm to ensures a constant risk profile in every market situation so maximum returns can be obtained using the lowest risk possible. This is a more active style of management than other more passive approaches like Nutmeg.
Here is a summary of the Ginmon service for German investors interested in using robo advisors:
• Assets Under Management: Not available; too new to get data
• Minimum Deposit Amount: Ginmon allows investors to open an account with a minimum of €1,000 if a €50 per month investment plan is initiated. If an automatic investment plan is not started, then the minimum investment amount is €5,000.
• Portfolio and Asset Allocation Details: Ginmon uses a passive and partially active investing strategy and employs exchange traded funds from UBS, Dimensional Advisors, and iShares.
• Fees: Fees at Ginmon are a combination of an annual management expense ratio plus a profit sharing plan. Annual fees are 0.39% of assets under management and the profit sharing is 1/10th of the profit earned on the account.
• Account Types Available: Ginmon offers private investment accounts for German residents.
The minimum investment amount to get started investing with Ginmon depends on whether or not a monthly automatic investment plan is established when the account is opened.
If an automatic investment plan is set up, then only €1,000 is required to start. The minimum amount allowable for monthly investment is €50 per month. These are low minimums which makes the service very accessible for most investors.
A monthly automatic investment plan is not required. If this type of plan is not set up, then the minimum investment required is €5,000.
Ginmon uses the principles of Eugene Fama’s Modern Portfolio Theory and Efficient Portfolios. Using these scientific principles, portfolios are built with the following outcomes in mind:
Optimum Diversification: Ginmon builds portfolios that are globally diversified across thousands of companies, multiple industries, a variety of countries and different investment classes including stocks, bonds, and real estate.
Anticyclical Factor Investing: Ginmon uses factor investing to allocate money based on the best opportunities for returns. This can include investing in asset classes like small-cap stocks and value stocks.
Tailored to Risk Profile: Depending on the investor’s risk profile and investment time horizon, the portfolios are adjusted to provide the highest possible potential return at the lowest risk level.
With all three of these concepts in place, investors are left with optimised portfolios with the highest potential for solid returns to help meet their investment goals.
Ginmon has two fees that are charged to clients that use their services.
The first is an annual fee payable depending on the assets that are placed under management with them. This fee is currently set at 0.39% of assets under management per year. For example, if a client has €100,000 with Ginmon, the fee charged will be €390.
What makes Ginmon unique is that they also take a percentage of the profits generated by the account. This way, if the client makes money, Ginmon stands to make more money in fees. The added bonus is that if the account does not make money, Ginmon does not charge these additional fees. They are very motivated to set up investment portfolios that have the best chance of positive returns.
The mechanics of the profit sharing plan works like this: Ginmon calculates the profit sharing fee based on the "High Water Mark" principle. If the account makes a historic high in the quarter, then Ginmon will take the additional fees. In addition, the profit sharing fee is calculated after the annual fee is deducted so there is no double dipping of fees.
Ginmon offers private investment accounts for German residents.
The process to sign up with Ginmon is similar to most robo advisors. The process begins with a detailed questionnaire that determines the investor’s risk profile, investment goals, and investment time horizon.
Once that is completed, then a detailed investment plan is calculated with a specific portfolio and asset allocation. With that information, the funding details are set up and money transferred into Ginmon’s custodian and the funds are invested as outlined.
For German investors interested in a low-cost investment service based on professional level advice, then Ginmon is a solid contender.