It’s not news that there is a proliferation of investment products available on the market today. 

As I write this, there are more than 6,900 globally traded ETFs and exchange traded notes available to investors, with more than 2,000 just in the U.S. Add to that the number of mutual funds at more than 10,000 and you’re looking at a universe that is much larger than the number of listed stocks.

The reality of this is that it’s increased the number of decisions and that investors as well as financial advisors need to make. The challenge of finding investment products, and specifically ETFs, is daunting, particularly finding those relevant funds that are the best fit for a particular investor.

To answer that problem, the finance industry has tried providing information rather than simply answering the question. But that’s not the correct approach. 

People need answers, not raw information.

It’s the difference between Google and the New York Public Library. Google can bring together answers to any question we might have, while the library forces us to walk around and figure out what data is most important to our needs. In that type of system, we learn what we want to learn, but not necessarily what we need to learn.

What investors really need to navigate this complex offering is simplicity. Not jargon, not overwhelming amounts of data, not confusion. The starting point of relevant discovery, communication and diligence is simplicity and ease of use without sacrificing quality.


Connecting the dots for investors

The investment journey starts with the discovery of relevant funds, but it doesn’t stop there. As an investor, you have to dig deeper into these relevant funds to figure out which of them is the best fund for your portfolio.

Maybe you prefer a lower risk profile. Maybe you prefer lower fees above all else. Maybe you’re focused on potential upside, regardless of risk and fees. There are dozens of variables like this — spreads, liquidity, volume, assets, duration, and so on. 

Whatever the case, portfolio optimization is a very personal process and it can differ wildly from investor to investor. That variability is the problem that Magnifi is set up to solve.

For example, let’s say an investor runs a query for “market neutral funds” on Magnifi. They’ll see a set of market neutral funds show up immediately and ranked by their market neutral scores, which are calculated for each fund based on its exposure and its prospectus.

The question now is which one is the best fund for the particular user that is conducting the search. So, we drill down. On the Magnifi “Compare” tab the user can take thing further, specifying the most important factors for them when selecting an investment.

In this example, with these criteria set, QMN shows up as an 85% best fit for this specific user. 

But the answer could be very different if a risk conscious user says, “I care about risk and not about fees at all.” Or, “I care about historical return, not fees at all.” In those cases, the result could be a different fund or a different score based on those criteria. 


Magnifi for financial advisors

This is particularly powerful for financial firms and advisors, which have been employing more and more model ETF portfolios in recent years. Trouble is, these types of portfolios create new layers of complexity for advisors.

The way investors have traditionally discovered funds is through tickers, filters and screens. That system is really designed the same way that doctors find medicines for their patients, but most of us are not doctors.

Model portfolios don’t even have tickers to begin with, so it is extremely difficult for any user adviser, investor, or even a researcher to identify which model portfolio would, for example, give me a yield or more than 1%. It’s not straightforward.

Magnifi solves this problem by using search so that an advisor can access all the relevant model portfolios across all the different sponsors delivered directly to them, without having to dig into the usual details. Then, using the fund selector tool as a model selector, identify which of the options is the best model for them.

This enables investors, and especially advisors, to cut down the amount of time that they spend researching and doing diligence. And we’re not talking about saving 10% of time or 20%. This is orders of magnitude different and helps advisors communicate with the end client in a way that the end client no longer feels stupid asking questions about their investments. 

Very quickly the adviser can look at a prospect’s portfolio, run a report, and within seconds have suggestions and optimizations for them, without having to go through a complicated research process and spend time on that. 

In short, Magnifi simplifies both the investment discovery and the model portfolio processes by making both better, faster and more effective, and freeing up time for other activities.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]