As robo advisors get comfortable in the Indian market, investors benefit the most as choices increase. Yet another option is now available with Kristal.AI starting up its platform for Indian investors. Not only will you be able to invest in a selection of domestic exchange-traded funds (ETFs) and actively managed funds, but also you can get exposure to global stocks through ETFs offered on Kristal AI’s platform.
Listen in to Asheesh Chanda, CEO & Founder, Kristal.AI, on what they have to offer the Indian investor.
Kristal.AI recently raised $6 million as funding. What is Kristal.AI?
Asheesh Chanda: We raised Series A funding to be able to expand further in India. We have a development centre in India and now the focus will shift to servicing Indian investors too. So far, we are present in Singapore and Hongkong markets.
In the wealth management world, the wealthier you are the better access to service you have; wealth managers are eager to give more time and love. If your net worth is not huge, you get ignored. The models which require a human touch, do tend to get expensive. Hence, a large segment of the population, which needs advice but can’t afford it, gets left behind.
Kristal.AI is here to solve this problem. Why AI? Those who don’t have access to human advice, need something close to that and in some forms better – that’s Artificial Intelligence.
We are here to deliver the right to financial advice in a transparent and seamless manner.
Is Kristal.AI structured to help pick the right An investment is made to give you a return. You make an investment if you use your money to buy either physical assets like property or financial assets like bonds and equity with an aim to receive income or gains... rather than just chasing return?
Asheesh Chanda: In India, one of the challenges that we face is that the industry is very transactional. Investors are forced to buy funds themselves, however, the knowledge maybe limited. The focus remains on 1- or 3-year returns, rather than looking at the risk and what’s inside the product. In the more developed markets, there is a lot more personalisation today. Personalisation at a very high net worth level is through people and at a larger scale is through algorithms.
Kristal is also offering the ability to invest in Global markets, how does that work?
Asheesh Chanda: We offer this through exchange-traded funds or ETFs. There are two key values, curated access and personalised advice. Curated access is for someone who has an idea of what they want and may try out this access through smaller amounts. The service is free up to $500or Rs 3,50,000 – we don’t charge anything. Its an incentive to get started. It’s not about buying one stock, rather we offer ETF portfolios; it’s less risky.
In the Indian context, ETFs are nascent, the market is growing.
If you know which ETF you want, use the curated access and buy what you want. If you don’t know what you want, then you are moving away from curated access and towards more of a personalised service. That’s when the AI-based algorithm comes into play. You have to complete the risk profile so that we know what is most suited for any one individual.
What makes Kristal.AI stand out?
Asheesh Chanda: Firstly, there is a curation you can use and an extended version in the form of personalised advice. Many platforms do a curation based on historical returns, but not on your profile. There is nothing which takes it to the next level and personalises a portfolio just based on your profile. This is one key difference you will find on Kristal.AI.
It’s not a hit and run portfolio. The algorithms are built to look at your profile and engage with you based on the information provided.
What are your plans for Indian mutual funds?
Asheesh Chanda: Our objective is to deliver an overall portfolio where you can have mutual funds in India, ETFs in India and ETFs globally. We are starting in phases. Our global product is ready and being used for a couple of years. We have been testing these algorithms in the Indian markets as well. The technology remains the same but it needs to be tweaked for the local investors.
What are Kristals all about?
Asheesh Chanda: A Kristal is a portfolio. It could be a single ETF, a basket of ETFs or a basket of stocks in some cases. The idea came from the concepts of transparency and a view into the future, kind of like a Crystal Ball.
Give us a peek into what happens behind the scenes in using AI technology.
Asheesh Chanda: Institutions manage money and risk, in a well thought through manner with models that have discipline inbuilt. One needs to have that in managing one’s own money too. It is very difficult to get that discipline because emotions come into play. But if you have a model, you are following a methodology and if you stick to it then you know it can work. AI is a tool to ensure that you have a methodology but the technology is evolved enough to understand your actions. If you are a human advisor, you will have 20-30 clients or more, but how much can you remember about all of them? In case of an algorithm, if you tell it that you like technology as a sector, for example, it will remember that forever unless you tell it otherwise. There is information retention.
The only drawback is that the effect of this is visible to the investor after a few months or a year. The algorithm needs time to interact and unless you are engaging with the AI for some time, it will not be able to map your preferences accurately.
Asheesh Chanda: We have not yet released the India mutual funds as the algorithm needs a little more time in the testing phase. It needs to better understand the demands of the Indian investor, which is taking time. Hence, we are releasing the global product beforehand and the Indian fund portfolio will follow.