Investing with True Wealth: Interview with Felix Niederer

Who makes the investment decisions for you?
The investment strategies that we propose were determined by the team on the basis of scientific principles, and I am also involved in this myself.

The True Wealth strategy is always the same or do you regularly adjust it according to your market assessment?
Since we do not believe in market timing, our investment strategies are made for a longer period of time. This way we avoid transaction costs (explicit costs, but also hidden ones like bid-ask spreads), which brings much more.

Some investors have concerns when they think of robo-advisors because they are afraid of what they might do in the event of a crash or sharp stock market correction. How does True Wealth address these concerns?
Our investment approach is very simple: we keep the individual investment mix constant. This means that if, for example, shares lose value, we buy them at a favourable price. Then, when the market recovers, we sell again gradually. This is basically a slightly countercyclical investment approach. The important thing to remember is that fluctuations in value are always part of the game. In the short term, the chance of a loss is almost 50% anyway, but this is offset in the long term by an attractive risk premium as compensation.

Would you recommend that investors regularly update their own market views with True Wealth or adjust their strategy/risk tolerance?
It is certainly good to pause once a year and consider whether the strategy still suits your own risk tolerance or whether your life situation has changed financially. We support investors in this online. As I said, I'm skeptical about market timing, but if you want to regularly implement your own market assessment in your own portfolio, there's probably nowhere else you can do it as easily and cost-effectively as on our platform.

Does it make sense to deposit in foreign currencies to the True Wealth account to actively reduce the exchange fees for products in foreign currencies themselves? (Different deposit accounts for different currencies)
Absolutely - with us, each account automatically has four currencies (CHF, EUR, USD, GBP). You can easily change the currency using the corresponding personal IBAN. in the desired currency and avoids expensive currency exchanges at the house bank. Our FX costs are also very low compared to other fintechs and online banks.

Foreign currency risk - do you hedge the products specifically?
No, we deliberately don't do that, because the cost-benefit ratio is often rather unfavourable for the investor. Besides, it doesn't help at all with bonds, because currency hedging essentially puts me back on the Swiss yield curve, but with more costs. Technically, the reason is that the interest rate differential between currencies is always already priced into the hedging instruments for fundamental reasons. On the other hand, we have a slight home bias, i.e. a slight investment focus on local investments.