12

Sanjay comments on Introducing Antigravity Investments: Free Investment Management for the EA Community - Effective Altruism Forum

You are viewing a comment permalink. View the original post to see all comments and the full post content.

Comments (10)

You are viewing a single comment's thread.

Comment author: Sanjay 10 July 2017 04:13:49PM *  8 points [-]

Thanks for this post, I used to work for a strategy consultancy that specialised in this sort of area, so I'm quite interested in this.

You state your value-add comes from (a) reducing fees to zero (b) tax-efficiency (e.g. donations of appreciated securities) (c) higher-performing investment strategies

I'm interested to know whether Antigravity investments is really needed when EAs have the option of using the existing investment advice that's out there. In particular:

-- (a) you also ask if people are willing to fund you. Does this mean that an alternative model for you would be to charge your clients and then allow your funders to donate to high-impact charities? If so, doesn't that mean that the zero-cost element of your model isn't actually a big advantage after all? (not meaning to be critical, I just don't know enough about your funding model)

-- (b) is it fair to say that donations of appreciated securities is a well-known phenomenon in tax-efficient donating, and anyone getting any kind of half-decent advice would get this anyway?

-- (c) (I understand you provide no guarantees) How many years of past performance do you have? Would you agree that in general, if a fund manager of any non-passive sort (smart beta or outright active) has a strong first few years, it's much more likely to be luck than an underlying advantage?

Sorry if the questions sounds sceptical, I'm conscious that I don't understand all the details about how you work.

Comment author: Brendon_Wong 10 July 2017 06:45:34PM 2 points [-]

Thanks for your comment, those are great questions!

A. In our current plan, profits should come from outside the EA community with our general market and nonprofit offerings, allowing us to provide investing services to EAs for free, so we are not decreasing funding for other high impact organizations. That's how the EA-directed hedge fund we are in contact with is offering their investing strategies for free to EAs as well; 100% of their revenue comes from charging non-charitable clients. The funding part was regarding funders that wanted to have a charitable impact by increasing our speed of growth and probability of success in our initial stages of development. We do not strictly require funding to get started as evidenced by the fact that we're already managing capital and providing EAs with advising services. The code we've written should continue to work with minimal maintenance for at least several years. Funding would certainly be helpful in covering expenses at first, such as access to better curated academic research. The best case scenario is that funding allows us to scale rapidly and significantly help the broader charitable sector as well as generate funds to donate, and the worst case is that the funding does not help with scalability that much and EAs get free investment management at a higher level of development (at the cost of missing other funding opportunities as you mentioned).

B. Automated advisors like Betterment and Wealthfront don't provide any sort of support when it comes to donating appreciated securities. A wealth manager charging high fees in exchange for personalized attention might be able to offer this service but that's probably not accessible for too many people. We are exploring the possibility of offering donor advised fund services with Rethink Charity and are in active talks with another nonprofit, and that could cleanly integrate with the donation of appreciated securities from our investment platform. We can build in features that select optimal securities to donate at any given time and report tax saving metrics to donors.

C. We have live trading performance since December 2016, and the length of time since strategy development depends on the strategy. For instance the Swensen portfolio has been around since 2005, whereas the more recent allocative and systematic strategies have roughly 2 years of performance since creation. I think that there is a greater possibility of luck playing a significant role with traditional human investment management whereas with rules-based investing strategies one can assess the strategy in much greater detail and accuracy (for instance by testing across international markets and timeframes if applicable) instead of purely assessing performance after inception.

Comment author: DonyChristie 11 July 2017 08:12:32PM 1 point [-]

I'm interested to know whether Antigravity investments is really needed when EAs have the option of using the existing investment advice that's out there.

Trivial inconveniences.

Comment author: rohinmshah  (EA Profile) 14 July 2017 05:30:26AM 2 points [-]

Is Antigravity Investments less of an inconvenience than Wealthfront or Betterment?

(I agree that roboadvisors are better than manual investing because they reduce trivial inconveniences, if that's what you were saying. But I think the major part of this question is why not be a for-profit roboadvisor and then donate the profits.)

Comment author: Brendon_Wong 14 July 2017 10:13:13PM *  0 points [-]

Other EAs in finance have noted trustworthy people and good evidence-based advice is hard to come by, there are EA specific considerations for investing, and quality people/firms often extract a lot of the value for themselves. This could make high quality EA financial advice and investment management a non-trivial inconvenience. Betterment and Wealthfront cover a fraction of financial services—basic passive investing—and while they're cheap, their performance is subpar, very much so compared to our passive and active strategies and passive strategies in general. High quality investment management is hard to get. For someone looking to donate appreciated securities with Betterment/Wealthfront they're probably out of luck.

Comment author: kbog  (EA Profile) 14 July 2017 11:18:20PM 1 point [-]

How is that relevant?