By Vivek Mohindra, Co-founder and Responsible Officer of Kristal.AI

1. INVESTMENT EXPERIENCE SHARING
& WHERE TO START FROM AS A STUDENT
BRINGING INTELLIGENCE INTO INTELLIGENT INVESTING 1
ETFS AND WHAT TO LOOK AT BEFORE INVESTING
By Vivek Mohindra KRISTAL.AI | AI-POWERED VIRTUAL WEALTH MANAGER

2. What is an ETF?
“An exchange-traded fund (ETF) is a
basket of securities
where investors buy or sell through a brokerage firm
on a stock exchange.
ETFs’ asset classes range from traditional investments to alternative assets like
commodities or currencies.”
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3. Market ETFs: Track indices like S&P 500, NASDAQ (e.g. SPY)
Bond ETFs: Provide exposure to virtually every type of bond: U.S. Treasury,
corporate, municipal, international, high-yield and several more (e.g. TIP)
Sector and industry ETFs: Designed to provide exposure to a particular
industry, such as oil, pharmaceuticals, or high technology (e.g. VHT)
Commodity ETFs: Designed to track the price of a commodity, such as gold,
oil, or corn (e.g. GLD)
Style ETFs: Designed to track an investment style or market capitalization
focus, such as large-cap value or small-cap growth (e.g. IWM)
Types of ETFs
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4. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
As of December 2018, ETPs have globally amassed US$4.82 trillion in assets under management
and traded over US$24.07 trillion in value.
Size of Market | Global
73.6%
17.0%
9.4%
AUM (billion), 2017
US
Europe
Apac
18.40%
18.70%
20%
17.50%
18.00%
18.50%
19.00%
19.50%
20.00%
20.50%
US Europe Apac
CAGR (07- 17)
794.2
1181
4464.1
5138
0
1000
2000
3000
4000
5000
6000
7000
AUM (billion) Number of ETFs listed
2017
2007
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5. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
In the past 10 years:
• Market Cap: US$13.6 billion → US$43.3 billion (2007 → 2017)
• Cash Turnover: 0.9% → 8.2% (2007 → 2017)
Size of Market | Hong Kong
13.6 22
43.3
155
0
40
80
120
160
200
AUM (billion) Annual Turnover
2017
2007
1999
• Launched first
ETF
2018
• 107 listed ETFs
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6. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
Global
1. SPDR S&P 500 ETF (SPY) -- USD$241.61 Billion
2. iShares Core S&P 500 ETF (IVV) -- USD$144.49 Billion
3. Vanguard Total Stock Market ETF (VTI) -- USD$93.76 Billion
4. Vanguard S&P 500 ETF (VOO) -- USD$93.36 Billion
5. Vanguard FTSE Developed Markets ETF (VEA) -- USD$65.18 Billion
Hong Kong
1. SPDR GOLD TRUST (2840.HK) -- HKD$266.55 Billion
2. TRACKER FUND (2800.HK) – HKD$91.15 Billion
3. HS HSI ETF (2833.HK) -- HKD$53.06 Billion
4. HS HSI ETF-R (82833.HK) -- RMB$45.50 Billion
Largest ETFs
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7. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
• Diversification
Features
“Don’t put all your eggs in one basket.”
"Consistently buy an S&P 500
low-cost index fund“ -- Warren Buffett
• Flexibility- limit orders,
margins, options, etc.
• Low costs with
high accessibility
• Transparency
• Easier settlement-
Online
“Investors can hold them, short
them or lend them” – Hortense Bioy
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8. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
• Sector specific ETFs
• Small-sized ETFs- illiquidity
• Inverse and leveraged ETFs
Risks
• Actively Traded- giving some control
away
• Times of the day when it can be more
risky to trade.
• Taxation- not applicable to HK
• Don’t take costs for granted- trading
costs similar to those for stocks. Always
add up the full costs of investing.
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9. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
• Sector specific ETFs
• Small-sized ETFs- illiquidity
• Inverse and leveraged ETFs
Risks
• Actively Traded- giving some control
away
• Times of the day when it can be more
risky to trade.
• Taxation- not applicable to HK
• Don’t take costs for granted- trading
costs similar to those for stocks. Always
add up the full costs of investing.
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10. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
• Fund expense ratios:
Expenses to Look at
• Trading spread costs:
• Tracking difference:
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11. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
'Zero Fee' ETFs (SFY, SFYX) Filed
25 Feb 2019
“Largest players have aggressively lowered the expense ratios. Today there are 13 ETFs
that charge 0.04% and another five that charge just 0.03% offered by Vanguard,
BlackRock, State Street, Schwab and Invesco.”
“These 17 ultra-low-cost ETFs brought in $69 billion in new assets in 2018, or 22% of
the industry‘s total $315 billion net inflows for 2018. Fidelity Investments took the fee
war to a new level by launching the first zero-fee mutual funds - zero management
fees and no other expenses, making their total operating expense zero in perpetuity.”
“The Adviser has contractually agreed to waive its unified management fee for the
SoFi 500 ETF and SoFi Next 500 ETF until at least March 27, 2020.”
Source: CNBC, SEC filings
Free ETFs
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12. 12
How Fees are Collapsing
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13. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
• Level of research, resources and commitment required
• Tough to Beat the market
• Unrealistic expectations
Why Investment is Difficult?
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14. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
Make mistakes
• Emotional decisions; Selling Low and Buy High
• No Stop Loss/ Averaging Down
• Water Cooler recommendations
• Impatience/ Over trading
Common Beginner Trader
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15. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
Research before you buy
• Diversify
• No Emotional Decisions (especially losing investments)
• Start small and start early
• Reasonable targets.
Veteran Trader
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16. 100+ Fintech firms blooming in the Wealth Tech space
ROBO-ADVISORS
PORTFOLIO MANAGEMENT MICRO-INVESTING
INVESTING TOOLS FINANCIAL SERVICES SOFTWARE
DATA PROVIDERS DIGITAL BROKERAGES
ROBO-RETIREMENT
Breadth of Wealth Tech Market
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17. “The development of full artificial intelligence could spell the end of the human race….It would take off on its own, and re-design
itself at an ever increasing rate. Humans, who are limited by slow biological evolution, couldn't compete, and would be
superseded.” — Stephen Hawking
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18. KRISTAL.AI -- ASSET MANAGEMENT MARKETPLACE
AI is what hasn’t been done yet!!
Areas of greatest use
• Optimisation vs Creativity
• Human Empathy vs No interaction
Benefits
• Incentive systems/ Unbiased/ Conflicts of Interest
• Process large amounts of continually updated data
• Learning from past experiences
Disadvantages
• Adaptation.
• Ethical and moral determination.
• Gamification/ social interaction
• Learning to make predictions
Vision of AI
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19. Combines classical and behavioral finance
Utility function as the basis
• Convert change in wealth to a metric, which can be thought of as a measure of
happiness
• Using utility and maximizing this, we take into consideration all scenarios, and
allow for different kinds of preferences
Overlays Black Litterman model for incorporating Investment Committee
views
• Balance views from multiple stakeholders
Uses Statistical & Artificial Intelligence / Machine Learning algorithms
• Monte Carlo simulation
• Hierarchical clustering
• Text Analytics
• Genetic Algorithm
Returns
Happiness
Tech Driven Advisory is Getting Intelligent & Holistic
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20. Kristal.AI is a Artificial Intelligence powered
Virtual Wealth Manager
Connect Portfolio Managers & Investors
Licensed for RETAIL INVESTORS in 3 countries
Hong Kong SFC - Type 4/ 9 Singapore MAS - CMS India SEBI - RIA
Dubai
DIFC - Commercial
About Kristal.AI
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