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ePB/Services/FAQ

FAQ

Frequently asked questions and answers

 

Here you can find answers to frequently asked questions about the ePrivate Banking platform.
Please contact us if you require any further information.

 

Top 5 questions

How does quantitative portfolio management work with the Robo-Advisor?

Using the powers of modern technology our Robo-Advisor analyses thousands of securities (Equities and ETFs) to construct the optimal portfolio based on the principles of quantitative management. While a traditional management approach considers assets in isolation, the Robo-Advisory algorithm focuses on the relationships between assets and selects a combination of securities to lower the overall risk of the portfolio. Based on historical data, market cycles and your investment preferences, the electronic asset manager offers you the portfolio that will provide you with the best returns relative to the maximum level of risk you defined in your profile. Since the risk/reward profile of a portfolio changes in line with the markets, the Robo-Advisors adapts your portfolio on a regular basis to ensure an optimal balance at all times. The Robo-Advisory quantitative management algorithm ensures strict compliance with your risk profile and investment preferences and removes emotions from the investment process. Nevertheless, you can of course change strategy and manually initiate a reallocation at any time. The reallocation is implemented immediately to create a new optimal portfolio based on the changes to your parameters. Should you have further questions, please also consult our User Guide.

How do the costs of the Robo-Advisory solution break down?

There are no account management fees. As soon as you activate an investment strategies, the costs are calculated as follows:

Total annual fees = annual management fees of 0.5% + annual administration fees (between 0.75% - 0.45% depending on investment amount

Additional cost information can be found here.

What is the minimum amount required to open an account?

The minimum amount for opening an ePrivate Banking account is CHF 20,000.

How do I create my own investment strategy?

1. Choose the currency and define your personal risk level.

2. Define your investment strategy by selecting universe (currencies, sectors, geographic areas etc.)

3. View simulations carried out by the system. You can refine and compare your strategies

 

4. As soon as you have chosen your strategy, the optimum portfolio is displayed.

5. Just click on «Invest» and our Robo-Advisor takes care of your portfolio.

Where can I find help and support with Robo-Advisory?

If you have questions, you can also contact our ePrivate Banking desk directly by calling +41 44 825 88 55 or write us an email: eprivatebanking@swissquote.ch. Swissquote offers you a wide range of assistance options to enable you to create the ideal trading conditions. Take part in our regular organised webinars, watch our videos and tutorials or consult our user guide. We would also be delighted to meet you in person at one of our lounges.

 

Fees and terms of conditions

Who can open an ePrivate Banking account?

Private clients can open an ePrivate Banking account. Companies/Banks interested in Swissquote’s ePrivate Banking platform should contact Swissquote’s White Label Team (wlsales@swissquote.ch or +41 58 721 97 74).

What is the minimum amount required to open an account?

The minimum amount for opening an ePrivate Banking account is CHF 20,000.

Is there a minimum holding period for which the money must be invested?

No, the investment strategy can be stopped at any time. Please note, however, that investments in shares should be made over a medium to long-term horizon (approximately five years).

How do the costs of the Robo-Advisory solution break down?

There are no account management fees. As soon as you activate an investment strategies, the costs are calculated as follows:

Total annual fees = annual management fees of 0.5% + annual administration fees (between 0.75% - 0.45% depending on investment amount)

Additional cost information can be found here.

 

What does it cost to modify my investment strategy?

Investment strategy modifications and realignments are included in the total annual fees. Manual transactions (initiated by the client rather than the algorithm) are charged separately: 0.1% of transaction amount (minimum CHF 9.00 / maximum CHF 99.00)

What exchange rate is used when buying shares in different currencies?

The rates used are the current exchange rates (major currencies: mid rate + 100 pips, i.e. percentage in points) at the time of the trade.

What are currency hedging costs?

Currency hedging costs are determined by the differences in short-term interest rates between the foreign currency and your reference currency, plus a spread to cover the administration of the hedge. We will be able to display the hedging cost in your account at a later stage when setting up your strategy; in the meantime, please contact +41 44 825 88 44 should you want more details on this topic before the strategy is activated.

Are fees taken into account when back-testing?

Yes, the chart shows the changes in the amount invested in the strategy. The Swissquote transaction fee and annual management fees are calculated during back-testing, but dividends are not taken into account.

 

Investment strategies

How does quantitative portfolio management work with the Robo-Advisor?

Using the powers of modern technology our Robo-Advisor analyses thousands of securities (Equities and ETFs) to construct the optimal portfolio based on the principles of quantitative management. While a traditional management approach considers assets in isolation, the Robo-Advisory algorithm focuses on the relationships between assets and selects a combination of securities to lower the overall risk of the portfolio. Based on historical data, market cycles and your investment preferences, the electronic asset manager offers you the portfolio that will provide you with the best returns relative to the maximum level of risk you defined in your profile. Since the risk/reward profile of a portfolio changes in line with the markets, the Robo-Advisors adapts your portfolio on a regular basis to ensure an optimal balance at all times. The Robo-Advisory quantitative management algorithm ensures strict compliance with your risk profile and investment preferences and removes emotions from the investment process. Nevertheless, you can of course change strategy and manually initiate a reallocation at any time. The reallocation is implemented immediately to create a new optimal portfolio based on the changes to your parameters. Should you have further questions, please also consult our User Guide.

How do I create my own investment strategy?

1. Choose the currency and define your personal risk level.

2. Define your investment strategy by selecting universe (currencies, sectors, geographic areas etc.)

3. View simulations carried out by the system. You can refine and compare your strategies

 

4. As soon as you have chosen your strategy, the optimum portfolio is displayed.

5. Just click on «Invest» and our Robo-Advisor takes care of your portfolio.

Once an investment strategy has been activated, is it still possible to modify or stop it later on?

Yes, once a strategy has been activated you can always decide to change it, modify its parameters or even abandon it. If the strategy is stopped, the system will ask the user if he/she wants to keep or sell the assets in the portfolio.

When a strategy is stopped and the assets are sold, how long does it take for the cash to be credited to the account?

Once the assets are sold, it generally takes at least one working day for the cash to be credited to the account.

How much time will I have to spend managing my investments with the Robo-Advisor?

Robo-Advisory is an optimal solution for people taking an active interest in financial markets without necessarily devoting all their time to them or even keeping regular track of what is happening on them.

The objective of our service is precisely to offer a solution for investing in financial markets without having to sacrifice time or build up the necessary knowledge.

The time taken to set up an investment strategy depends on the number of simulations performed by the user and can therefore take less than 5 mins or much longer.

 

Investment universe / Investment process

Which assets are taken into account to create the investment universe?

The Robo-Advisory solution is based on four asset classes: cash, fixed income, stocks and commodities.

Our equity offering includes the following markets:

Switzerland: about 50 (SMI / SPI)
Germany: about 130 (DAX / MDAX / SDAX)
Europe: about 220 (STOXX Europe 600, Portugal not included)
USA: about 500 (S&P 500)

Note: Some stocks may be excluded due to special foreign trading restrictions (e.g. those listed in Hong Kong, Poland, Romania, Brazil and Norway).The list of stocks taken into account is therefore subject to change. 

Our ETF offering includes several hundred ETFs listed on the Swiss, European and American markets (excluding fixed-interest and short ETFs):

An exchange-traded fund (ETF) is an investment fund traded on a stock exchange, much like a stock. Most ETFs track an index such as the SMI and may be attractive as investments because of their low costs and stock-like features. ETFs are an easy way to invest in a particular country, region, sector or asset class.

What criteria is the system's stock selection based upon?

The investment algorithm creates and optimises the portfolio by carefully selecting the underlying assets available within the investment universe that generate the highest expected returns based on the selected risk limits.

How can I check my portfolio before investing?

Before clicking on “Invest”, you can display the list of all assets selected for your portfolio.

How can I keep track of the purchased assets?

Once an allocation has been made, the list of purchased assets is visible in the account overview.

Who picks the instruments that are available in the investment universe?

The stocks available in the Robo-Advisory investment universe are picked by our Investment Committee.

How does the Robo-Advisor select instruments that are suitable for my investment profile?

Based on your own risk profile and preferences, our home-grown algorithm will perform a selection of suitable stocks. Should you wish to modify your preferences, the algorithm will adapt to your requirements and perform a new selection.

How does the reallocation process work?

You can choose from three options for the reallocation frequency: 3, 6 or 12 months.

  1. When the strategy parameters are modified, a reallocation is triggered immediately. The portfolio is tested each week with a CVaR check to ensure it remains within the predefined risk range.
  2. If not, the portfolio is reallocated immediately, regardless of the reallocation frequency
  3. In addition, the constituents of the portfolio are monitored on a daily basis and any extraordinary decisions are taken by the Investment Committee on this basis.

Is it possible to make manual reallocations?

A reallocation can also be triggered manually. The reallocation will then be performed immediately in order to construct the new optimal portfolio.

The risk will be tested with CVaR. How does this actually work?

The portfolio is tested once a week with a CVaR check to ensure it remains under the predefined maximum risk level. If not, the portfolio will be reallocated immediately, independently of the chosen reallocation frequency, to re-establish the optimal allocation (according to the strategy chosen initially).

Is there a stop loss function integrated in the system?

There is no stop loss-function in ePrivate Banking. We tested billions of simulations and it turned out that using this function, whether for trailing, fixed or volatility-based stop loss, never enhanced performance. The system is therefore always invested. However, a reallocation is triggered if the global risk exceeds the limit.

How does the system react when faced with a market collapse?

In case of a strong market correction, depending on the CVaR risk level () chosen by the client, the system will proceed as follows:

In order to avoid a yo-yo effect resulting from upward and downward movements in financial markets, the system will take a few days to perform a reallocation of the portfolio before putting it into cash. Putting a portfolio into cash is a way of avoiding a well-known and solid phenomenon: volatility clustering. When volatility goes up, it tends to remain high for a certain period of time.

Our experience with the Robo-Advisory solution has shown that whenever financial markets enter a period of correction, our portfolios lose less than the markets. Depending on the risk level, the recovery can be slower than the financial market recovery. The above phenomenon can be observed in our back-testing.

What benchmark does the system use?

It is possible to select an index to compare its performance with that of the selected investment strategy (Europe: SMI, DJ Euro Stoxx 50, DAX, CAC 40; United-States: DJIA, S&P 500, Nasdaq).

Are there any options for having drawdowns lower than the benchmark?

If the risk level of a selected portfolio (e.g. CVaR 2% - 3%) is below that of the benchmark, then the drawdowns of this portfolio are substantially lower than those of a comparative index. In this case, it is important to know the precise reference index.

Is it possible to have more intervention opportunities similar to those offered by a trading account?

The Quantitative Portfolio Manager is based on statistics, mathematics and algorithms. The goal is to avoid emotional bias in the investment process. Nevertheless, it is possible to define specific assets which should be included (white list) or must be excluded (black list) from the portfolio. Furthermore, it is possible at all times to define category preferences in order to overweight or underweight specific investment categories during future allocations.

You can also sell one or more securities in your portfolio at any time.

What is the wishlist and blacklist?

You can specify underlying assets within the investment universe that should be preferred for trading by the investment algorithm by setting up a «wishlist». The investment algorithm will take your preference into account if trading in the underlying asset is consistent with your defined risk limits and expected returns.

If underlying assets within the investment universe are excluded from trading by the investment algorithm, these securities are placed on the «blacklist».

 

Administrative Questions

What do I have to do in the event of a corporate action?

Nothing at all. Swissquote will take all necessary corporate action decisions in your interest.

What documents/notifications will I receive?

You will receive the following notifications in your account:

  • Stock exchange advices
  • Tax statement
  • Account overview
  • Full transaction record

Does the system send me any alerts?

No alerts are sent. However, you will receive notifications on a regular basis in your message account. The list of events that are relevant to your portfolio is accessible at all times in the Reporting-section of your ePrivate Banking account.

What about security?

Access to your account is protected by a combination of user name, password and a level-3 security card, as well as the personal e-mail inbox.

I forgot my password. What do I do now?

If you have forgotten your password, please contact our ePrivate Banking desk on +41 848 25 88 88.

Where can I find help and support with Robo-Advisory?

If you have questions, you can also contact our ePrivate Banking desk directly by calling +41 44 825 88 55 or write us an email: eprivatebanking@swissquote.ch. Swissquote offers you a wide range of assistance options to enable you to create the ideal trading conditions. Take part in our regular organised webinars, watch our videos and tutorials or consult our user guide. We would also be delighted to meet you in person at one of our lounges.

 

Glossary

What does Robo-Advisory mean?

The Robo-Advisory solution involves quantitative portfolio management carried out by an electronic asset manager that builds the ideal portfolio based on the information you provide. Portfolio management is a question of strategic decisions and trade-offs aimed at maximizing investment returns at a given risk level, based on currently available financial information. Quantitative techniques use historical data such as prices, returns and volumes to make investment decisions. You will find more information and details in our User Guide.

What does CVaR mean?

It is the average weekly Conditional Value-at-Risk (CVaR) of your strategy portfolio, with a 95% confidence level. CVaR is a more conservative risk metric than the traditional Value-at-Risk (VaR) measure. VaR is a statistical measure of market risk of an investment instrument. For example, a VaR of -2% means that for a week holding period, the probability of losing more than 2% of your portfolio value is 5%. Conversely, there is a 95% probability of not losing more than 2% of your portfolio value during a one–week period.

What does “reference currency” mean?

All the calculations are done in the chosen currency (if you are considering securities in other currencies, their historical data will be converted into the chosen reference currency for all calculations and simulations).

What does back-testing mean?

Back-testing consists in simulating your strategy over a past period according to the universe/parameters predefined by Swissquote or set by you. The back-test is performed on the longest possible period according to the available data.

What is meant by «underlying assets»?

An «underlying asset» is a financial instrument that underlies an option or warrant. These instruments can include equities, indices, fixed-income securities and currencies.

What does “universe” mean?

The universe is the collection of all admissible investment instruments.

What does granular universe mean?

A granular universe means that the size of the client’s universe depends on his asset under management (AUM). The idea is the following: For a low AUM value, it is difficult to offer diversification with individual financial vehicles, such as stocks or tracker funds on given commodities, since transaction fees imposes to get low number of stocks. To address this issue, diversification will be achieved firstly through ETFs representing global asset classes or particular investment grades for financial instruments. As soon as AUM increases, ETFs are replaced by their constituent stocks. Diversification is then done with the Swissquote algorithm itself at a thinner level.

What is currency hedging?

Currency hedging, or exchange rate hedging, gives protection against fluctuations in the exchange rate between the reference currency and the other currencies in which investments are denominated. Hedging currency risk means that, with respect to reference currency of the strategy, the client will be exposed only to market fluctuations of a stock in its own currency.

 

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