Investment Platforms
Serving Online Brokers, Turnkey Asset Management Platforms (TAMPs), and Fintechs.
How an Investment Platform launched a Quantitative Smart Portfolio with STRATxAI
Client Profile
eToro, the global trading and investment platform, provides over 38 million users access to a range of assets, including currencies, commodities, indices, crypto, and stocks. Driven by its commitment to innovation, the firm sought to launch quantitative smart portfolios to enhance its investment offering.
Challenges
eToro faced several key challenges in launching quantitative smart portfolios, including:
Expertise Gap: Although eToro recognized the need for smart equity portfolios, they lacked the in-house expertise to design, implement, and manage them.
Resource Constraints: Developing quantitative equity portfolios internally would demand significant time and resources, diverting focus from core business operations.
Outsourcing Needs: Finding a partner capable of delivering institutional-grade smart portfolios aligned with its core offering proved challenging.
Our Solution
STRATxAI collaborated with eToro to co-create a bespoke smart portfolio. Key steps included:
Client Discovery: Gained insights into their mission to attract both younger and long-term investors with robust investment portfolios that harness the power of big data.
Strategy Development: Leveraged our proprietary AI engine to develop a range of multi-factor equity portfolios tailored to their specific requirements.
Strategy Refinement: Engaged in an iterative co-creation process to refine and identify the optimal strategy that aligned with their investment objectives and client needs.
Client Outcomes
eToro launched the “Cutting Edge” Portfolio in December 2023. Designed to deliver superior risk-adjusted returns, the portfolio has attracted over 375 investors to date.
Key Results One Year After Portfolio Launch:
- Achieved an annual return of 29.7% without holding any MAG 7 stocks.
- Outperformed all benchmarks except the S&P 500 with a Sharpe Ratio of 2.2.
- Stronger downside protection than major indices with a Max Drawdown of -4.6%.
- Beta of 0.6 to the S&P 500 and 0.4 to the Nasdaq 100.
