Unhedged: Next-generation robo-advisor hits the market
A super simple robo-investing platform that gives investors access to sophisticated algorithmic investing via an app, promises to give the Australian robo-investing sector a shake-up.
Unhedged, which recently closed a pre-seed capital of $500,000, is on a mission to enable everyday people to invest like a boss by democratising algorithmic investing.
It has been co-founded by serial entrepreneur and prolific algorithm builder Peter Bakker, who is anything but your typical private trader. With a background in computer sciences, the polymath has spent more than a decade working in statistics and building algorithms to trade in overseas financial markets.
The Melburnian has sold two previous ventures and has worked for some of the world’s most extraordinary companies, including on the sales side of Google and as chief marketing officer at Aussie Farmer’s Direct.
“Everyday investors don’t have the time or energy to learn advanced investment strategies and are therefore robbed from above-average returns. So, we’ve designed a super simple app-based experience that allows everyday investors to assign their money to advanced AI trading algorithms to access higher performance.”
He founded Unhedged alongside Mike Cohen, who has spent 10 years in management consulting in financial risk management and digital transformation for Deloitte and KPMG and five years at Macquarie Bank responsible for capital management.
Peter Bakker has personally sunk nearly $400,000 into the app-based technology and built a Board and team of sophisticated advisors including ASX Board member Carolyn Colley as an independent non-executive director. Colley has played a leading role in the advancement and disruption of fintech in Australia.
While working for hedge funds, investment banks and top tier consultants, the pair realised that everyday investors didn’t have access to advanced investment tools.
Bakker, who is known among his trading friends as Chewbakker (or Chewie), has decades of experience in trading options and future markets. He has long harboured a dream to enable algorithmic investing for everyday investors simple.
Unhedged is designed to take on industry heavyweights Stockspot, Six Park and Raiz, with most fees only charged when it outperformed the benchmark.
“The other robo-investors have been built based on an outdated investment theory and the fact is that the world has changed, the market has changed, and the technology has evolved since then,” he says of the next-generation robo-advisor.
The technology used by Unhedged employs algorithms that were, until recently, only available to well capitalised wholesale investors.
“Cloud competing, open-source developments and access to capital has changed this game dramatically, so startups can play in this area, and has opened up advanced strategies for new players. Unhedged uses algorithms that scan the market every second for opportunities, as opposed to static monthly rebalancing processes undertaken by other robo-investors,” Bakker says.
Unhedged’s other point of difference is the four carefully developed artificial intelligence and machine learning algorithms developed based on beta-switcher algorithms, as opposed to the beta-dampeners used by robo-advisors.
“Unhedged algorithms create a more diversified portfolio than most people can construct by themselves. The financial industry is often charging for doing very little, but we put our money where our mouth is: the majority of fees will only be charged when we outperform the benchmark and set a new high-water mark.
“Unhedged removes human emotion from the equation, which is notorious for sabotaging rational investment decisions. The app features gamified referral and comes at a time when investors are ready for alternative ways to invest. We also have low, minimum deposits – $100 is enough to get started.”
Australia’s regulatory framework is more open to innovation. The app enables investors to invest in a combination of three tested algorithms to achieve greater diversification.
“Unhedged is launching at a time when Australians are up against astonishingly low interest rates, a booming property market, pent-up demand for holidays has combined to put a renewed focus on investing,” Bakker says.
“Algorithms have many advantages over humans, who simply read the data and move the moves. They’re always ‘on’ and never emotional. Investors can set and forget if they wish, and let the algorithms do all the work. Or they can change their allocations and be a little more hands-on. Either way, this is active investing.”
Bakker was one of the most copied algo developers on Quantopian, a community of professional and self-taught quants building and sharing open-source trading algorithms.