This post is sponsored by Emperor Investments. All opinions are my own.
In recent years we’ve seen a quick increase in the popularity of robo advisors, and one of the more unique companies that has entered this competitive market is Emperor Investments. Unlike other robo advisors, Emperor Investments focuses exclusively on stocks, or equity investing.
In this article, we’ll look at the basic details about the company, methodology, and what it means to you, the investor.
What Is Emperor Investments?
Emperor Investments is a Toronto-based robo advisor that was launched in 2017. Although the company is only two years old, the research and development that serves as its foundation began back in 2011. Co-founders Brenna Casserly (CEO) and Francis Tapon (CIO) manually developed and tested the algorithm and investing philosophy. In 2017, after the foundational elements were perfected, Tornike Natsvlishvili (CTO) came on board to create the technology to automate the process.
The company exists to make better investment options accessible to everyone. “Unless you have over $250,000 in assets, the only options available to you if you want to invest in the stock market are funds or robo advisors that buy funds. I believe that the rich aren’t the only people who should have access to truly customized, pure stock portfolios. I founded Emperor Investments with my co-founder Francis because I wanted to democratize access to the stock market for the people who need it the most; that’s why we exist.” – Brenna Casserly, CEO
The approach taken by Emperor Investments uses a mix of both active and passive investing. They actively select individual companies for their clients to invest in, and then once the investment is made, it becomes mostly passive. Some occasional re-balancing of the portfolio is done, but for the most part, it is a buy and hold approach.
Each client owns the stocks within his or her portfolio. They are not pooled with other investors.
For closure, I opened an account with Emperor Investments last year, and I’ve been a client for about 9 months at the time of publication (June 2019). I had been wanting to do more research about investing in stocks, and particularly dividend stocks, but I was never getting around to it. When I came across Emperor Investments, I decided it looked like a good option since I’m not sure when I’d find time to do research on my own.
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While Emperor Investments has only been around for a short time, they have forward tested the results to compare vs the actual results of the S&P 500. The algorithm was tested from March of 2007 through May of 2018. You can see from the chart below that the Emperor Investments portfolio outperformed the S&P 500 by more than 8% per year. During this time period, the S&P 500 produced a return of 8.25%, assuming all dividends were reinvested (source). The Emperor Investments portfolio exceeded 16% per year (see the disclosures here).
How Are The Investments Chosen?
Each quarter, Emperor Investments will sift through the data on U.S. stocks. Those that meet all of Emperor’s criteria (there are usually about 300 stocks that meet the criteria) will make up what they refer to as the “Dream Team“. Emperor does not give away most of the details that they look for, but they do tell us that they look for stocks that have consistently paid dividends for at least 15 years without reducing or not paying the dividends.
Although a big part of that process is automated, companies that make it to the Dream Team pool are also reviewed by Emperor Investments’ analysts.
Only stocks that are in this Dream Team pool will be considered for investing. When a new client creates an account with Emperor Investments, they will be given a series of questions related to things like risk tolerance.
Emperor Investments uses a goal-based system, with goals created by the client. The goal and the responses to the questionnaire will be used to determine the stocks that are selected for the client.
The goal-based approach is unique because each goal is given its own portfolio, designed to achieve that goal. You can set up an infinite number of goals.
The screenshot below shows an example of what you’ll see after creating a goal. In this case, the goal is to reach $100,000 for retirement in 15 years. You’ll also see the specific stocks that are selected for the portfolio.
Let’s take a look at a few of the most significant benefits for clients of Emperor Investments:
- The potential for passive income from dividends. Emperor Investments chooses companies that consistently pay dividends to their shareholders (of course, like any investment, future performance is not guaranteed, and risk is involved).
- Clients can choose to have dividends reinvested or to have the dividends held as cash, which can be withdrawn at any time. Obviously, reinvesting the dividends will allow the investment to grow faster. This setting can be changed at any time.
- Pure stock investing, which allows for a more selective approach rather than investing in mutual funds and ETFs.
- The user interface is well designed and easy to use.
- Save time. Instead of dedicating your time to researching which stocks to buy, Emperor will do the work for you.
- Responsive customer service. I’ve reached out to customer support a few times and received a helpful response in less than 24 hours.
Who Is It For?
Emperor Investments may be a good choice for you if any of the following apply to you:
- You want to invest in stocks, but don’t have the time to research.
- You like the idea of an investment that can provide a source of passive income.
- You like the idea of using goals to influence your investments.
- You’re looking for returns that have historically outperformed the S&P 500.
Now, let’s take a look at some of the important details that must be considered before making an investment decision.
Emperor Investments charges an annual fee that varies depending on how much you have invested. The fee ranges from 0.20% – 0.60, based on the details below:
- Less $100,000 invested, 0.60% annual fee
- $100,001-$300,000 invested, 0.50% annual fee
- $300,001-$600,000 invested, 0.40% annual fee
- $600,001-$900,000 invested, 0.30% annual fee
- More than $900,000 invested, 0.20% annual fee
The 0.60% fee is higher than most other robo advisors, but lower than what you would pay for a professional advisor. It’s also important to consider that there are no hidden fees. Since all of your investment will be held in stocks, there are no other fees aside from the 0.6%. Most robo advisors will charge their own fee, and then you’ll also pay a management fee for the mutual funds or ETFs that are in your portfolio. (Get your first six months with no fees by opening an account through this link.)
The minimum investment is currently $500. This was recently lowered from $2,000. The $500 minimum makes it a viable option for more people, and also allows you to start with a smaller amount if you want to try it before investing more.
You must have a United States address in order to open an account with Emperor Investments.
Automatic rebalancing is done annually and can be done more often when a triggering event occurs (for example, if the value of an investment rises too high above the target weight for that holding). Due to the buy and hold approach, the goal is to rebalance as little as possible.
Several different types of accounts are available, including individual (after-tax), Traditional IRA, Roth IRA, and Rollover IRA. Joint accounts are possible, but you need to first open the account as an individual and then contact customer service. More account types may be added in the future.
Get 6 Months for Free!
Emperor Investments has offered to give readers of Vital Dollar 6 months with no fees. All you need to do is use this link to open your account and you will have no fees for the first 6 months.
- Investment Options
- Ease of Use
- Customer Service
Excellent Robo Advisor with a Unique Approach
Emperor Investments stands out from other robo advisors because of the approach of investing only in stocks. The fees are reasonable, although higher than some competitors. The platform is very easy to use and the goal system allows you to get started towards a customized portfolio very quickly. If you’re interested in investing in stocks but don’t have the time for research or interest in a DIY approach, Emperor Investments is a great choice.