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Whitebox is a German robo advisor that offers an investing service which combines passive investment management with an active management overlay. This means that Whitebox strives to not just meet the market returns, but strives to beat the market. This is different from other robo advisors like Ginmon or Growney, that are totally passive in their investment approach. Whitebox’s approach to investment is by being active where necessary, but passive where possible. They do this by taking a value approach to avoid permanent capital loss, conducting fundamental analysis, and doing deviation based rebalancing. These are all active strategies that are designed to extract additional gains from the market.
They also remain passive by only using low cost exchange traded funds, do not do any stock market timing and individual stock picking, as well as taking a long-term portfolio view. The impact is a product for investors who do not want to just accept the returns of the market, but would rather strive for additional returns so their portfolios have the potential to perform better and make them more money. This is never guaranteed, but Whitebox assures investors that their approach to the market is sound, well researched, and has been proven to work.
Before getting into more detail about Whitebox, here is a summary of the business:
Whitebox has a higher than average minimum deposit amount of €5,000. The reason for this higher amount is due to the more active style of management undertaken by the company. Investing using a more active style requires additional funds to make the process work so investors are required to put more money in to start.
A Whitebox portfolio is unique in the robo advisor space. Rather than just providing a totally passive investing experience, they provide clients with a value driven approach to selecting passive investment alternatives.
Their choice of investment assets are all low-cost exchange traded funds which helps keep the costs down, and avoids buying individual securities like stocks and bonds. This has a dramatic impact on the risk profile, as the portfolios are not exposed to individual stock or bond risk. Instead, they only hold widely diversified products that provide exposure to whole markets.
As an example, here are the passive equity ETFs currently used in the portfolios they manage for clients:
There is also a selection of funds that cover the global bond markets as well as alternative investments like commodities, gold, infrastructure, and real estate.
Rather than just taking the passive approach to determine the split between stocks and bonds in a portfolio, Whitebox also is active by determining which markets and countries are a better value – or put another way – cheaper.
In other words, they conduct fundamental analysis to determine if a particular investment is cheaper now and buy that as opposed to more expensive ETFs. The result is a portfolio that offers the potential for better returns, a better risk/reward profile, and better protection against capital loss.
The portfolios built by Whitebox can be very diverse, and can include 23 different asset classes across 60 different countries. Here is an example of a portfolio that Whitebox includes on their website:
Whitebox is best suited for investors with a higher capital base, as the fees are higher than most robo advisors for investment amounts less than €30,000. They use a tiered approach to fees, with lower fees available for clients who invest more money with them. Here are the fees as per their website:
As you can see, the started fee of 0.95% is higher than most robo advisors which can start as low as 0.00% for the first £10,000 like Moneyfarm.
Anyone who is over 18 years of age and is a resident in Germany can sign up for Whitebox. If you meet these requirements, then the sign-up process is simple. The process starts by Whitebox asking a series of questions to define the investment objectives, risk profile, and investment horizon. From there, an investment profile is created and a portfolio is designed that meets the objectives and needs of the client.
Once the account is funded, the investments are purchased according to the chosen asset allocation. The Whitebox robo advisor and team then start monitoring the portfolio and adjusting it as required based on movement in the market.
Overall, Whitebox is an alternative robo advisor for investors interested in taking a more active approach to investing using passive and low-cost investment choices.