This month, in a survey conducted by ING Luxembourg, 44% of the Grand Duchy's residents said they were ready to have their investment managed or assisted by a robo-adviser, though a quarter of those still expressed a desire for a ‘final approval’.

Robo-advising has exploded in the last few years, with predictions of near-70% annual growth in the market being made over the next five years, which would bring it up to $2.2 trillion. Luxembourg for the meantime will play a small part in that, with only one robo-trading service provider in the market so far, KeyPrivate from Key Trade Bank, but that is sure to change as time passes. 

KeyPrivate, launched in Luxembourg this year, is building on the back of the successful launch in Belgium in 2015 of a service that aims to provide diversified, effortless investment opportunities for those with a minimum of €15,000 to put in. With that in hand, investors simply need to determine what level of risk they’re willing to face, whether they wish to make monthly transfers and the investment period, and the system takes it from there selecting twelve trackers across a global range of commodities, bonds, stocks and cash whose levels are adjusted each month according to movements in the markets. 

But it’s not all digital. Since the software can only go so far, a human committee oversees the process making adjustments where necessary. The humans validate and calibrate the decisions taken by the program, aiming to enrich the returns in the process. 

The system allows service providers to keep costs down, and customers to access a simple, “no-frills” system previously reserved for the ultra-wealthy. Which is not to say that Key Trade don’t have high-net-worth individuals in mind for KeyPrivate, but automation has allowed them to democratise their service too. 

The software behind KeyPrivate was developed by Gambit, a Belgian FinTech company whose program is designed around Modern Portfolio Theory. The Nobel Prize in Economics-winning theory holds that risk-averse investors can construct portfolios that maximise return based on a given level of market risk. The theory holds that it is possible to construct an “efficient frontier” of optimal portfolios delivering the maximum return for a given level of risk through diversification. Its developers, Harry Markowitz and William Sharpe, took the prize in the 1950s, and it seems to be weathering well among investment managers. 

Key Trade does not charge custody fees, and strives to keep execution fees to a minimum, 0.75% per annum, according to managing director Thibault De Barsy. Moreover, the customer’s investment is not locked up for the initial-stated investment period, and can be recovered at any time.