ADGM-licensed hybrid wealth manager unveils new cryptocurrency investment themes

FinaMaze's latest offerings are in response to rising demand for digital assets

FinaMaze, a hybrid asset manager regulated by the Abu Dhabi Global Market, unveiled two new investment themes – cryptocurrency and inflation protection – for professional investors on Tuesday.

A hybrid asset manager offers investment advice through a combination of human experience and machine learning outcomes.

FinaMaze also offers generalised cross-asset-class investments in US, European, Gulf, Indian and Chinese stocks, fixed income, commodities and currencies, thematic investments in different sectors and geographic regions and specialised investments.

FinaMaze's "opportunistic" investment themes were in response to rising demand for cryptocurrency. It also claims to be the first robo-advisory offering cryptocurrency investment solutions in the Mena region.

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We will never recommend to put a significant share of clients' wealth into opportunistic portfolios

"Such investments are made to benefit from market opportunities, but cannot be used to sustain a large portion of our customers' wealth. They complement an already existing portfolio," Mehdi Fichtali, chief executive and founder of FinaMaze, told The National.

“We will never recommend to put a significant share of clients’ wealth into opportunistic portfolios. Instead, they can put 50 per cent to 60 per cent of their wealth into generalist portfolios.”

Robo-advisers have become popular within the wealth management sector because algorithms can crunch large and intricate data sets across different parameters faster and more precisely and at greater volumes than most people.

In addition, they reach a historically underserved market of middle-class investors unable to access portfolio management services due to minimum investment requirements.

Launched during the FinTech Abu Dhabi 2020 forum in November 2020 and regulated by the ADGM’s Financial Services Regulatory Authority, FinaMaze customises profiles for investors from thousands of different options and then offers investment advice based on a combination of human experience and machine-learning outcomes.

The site’s in-house AI algorithm uses this information to determine each investor’s personality.

Clients then pick one or more investment themes – FinaMaze calls it a SmartFolio – across regional and global financial markets.

Under the cryptocurrency theme, FinaMaze offers four investment strategies: a diversified cryptocurrency basket including Bitcoin, Ethereum and Cardano, among others; a mix of cryptocurrency and blockchain companies; market-neutral (long altcoins versus short Bitcoin); and a contrarian Bitcoin, which tracks the digital currency’s inverse performance, Mr Fichtali said.

Cryptocurrencies are not licensed by the UAE Central Bank although a number of cryptocurrency exchanges have been given permission to operate within the ADGM.

The UAE dirham is the only legal tender in the country that is recognised by the Central Bank.

Under the market-neutral portfolio, clients make money based on the relative outperformance of altcoins against Bitcoin, he said.

Meanwhile, the “inflation-protection” portfolio aims to resolve investor concerns as inflation increases in the market.

“We designed a cross-asset-class SmartFolio that opportunistically profits from the inflation upsurge. It includes yield products, commodities, Swiss franc, real estate and structurally inflation-resistant sectors versus the S&P,” said Mr Fichtali.

FinaMaze charges a fee that ranges between 0.45 per cent and 0.95 per cent of a client’s investment per year, the founder said.

The wealth manager recently launched other opportunistic themes such as “China Dragon Tech Leaders” and “Covid-related” portfolios.

“The China Dragon Tech Leaders portfolio leverages on the massive sell-off in March when hedge fund Archegos Capital Management went bankrupt and dragged down Chinese tech stocks. The idea is to profit from the rebound of Chinese tech companies,” the chief executive said.

The “Covid-related” portfolio includes securities and stocks of companies, such as technology and biotech, which benefited from the pandemic in 2020. FinaMaze has also created a portfolio of stocks in companies that were hammered by Covid-19, such as airlines and tourism companies.

“Customers can invest in them to take advantage of a market rebound and the fast pace of vaccinations globally,” Mr Fichtali said.

The FinaMaze platform is intended for professional investors only and its hybrid human/machine model currently manages more than 100 portfolios, the statement added.

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