FutureSafe is an intelligent investment platform that shapes your investment outcomes based on objectives that you control. Discover the science behind our technology.

Outcome Shaping

At the core of FutureSafe is a technology that’s fundamentally new. We call it Outcome Shaping. Outcome Shaping adjusts your trading strategy based on three objectives that you control:

  • Time Horizon: How far away is your investment goal? (Note that you can set multiple individual goals.)
  • Safety Net: The threshold below which you don’t want your portfolio to fall at the end of your Time Horizon.
  • Upside Target: The target that you’d really like to hit at the end of your Time Horizon.

Intelligent Risk Management

How does FutureSafe help you reach your upside target without falling below your safety net? We do it, in part, with Intelligent Risk Management, which utilizes adaptive risk controls. 

  • Adaptive risk controls are based on a Risk Budget, which is calculated by comparing your current portfolio account value with your future objectives.
  • The closer you are to your falling below your safety net (or reaching your upside target), the more your portfolio shifts from stocks into bond ETFs.
  • Your bond exposure consists of Treasury Bond ETFs, immunized to changes in the interest rate, which together provide a safe way to grow your assets with minimal risk.
  • Bonds typically grow at a slower rate than stocks, so we calculate the optimal ratio between the two and balance your portfolio accordingly. 

As your portfolio changes in value as you approach your time horizon, your risk controls adaptively maximize the chances of reaching your upside target without falling below your floor.

Direct Indexing

Direct Indexing means that you directly hold every stock in an index or strategy in exactly the market weight you’d like.

  • Direct indexing has historically been the domain of institutional investors, who have the capital to hold the underlying stocks within an index in their proper ratios.
  • Thanks to the twin introductions of fractional share ownership and asset-based fees, direct indexing is now available to individual investors.
  • Fractional shares allow the ratios of stocks from an index to remain in balance with each other, even at smaller account sizes.
  • Asset-based (instead of transaction-based) fees allow for hundreds of trades to happen at no incremental cost to the investor.

Portfolio Customization

FutureSafe provides you with several strategies to guide your investments. In addition, you can customize your portfolio within a given strategy.

  • Choose between one of two signature strategies originally developed by Optimal Asset Management for institutional investors.
  • Alternatively investors can choose the S&P 500, or any other US-based S&P Dow Jones index strategy.
  • Stock-level exclusions allow you to remove individual stocks you don’t want, whether it’s for moral, ethical, or tax reasons.

Need help choosing the right strategy? We’ll put you into a fitting strategy depending on the type of account (i.e. taxable or not) or can work with you to choose the option that works best for your particular needs.

Factor Investing

Factor investing is considered by many, and in particular large pension funds, to be at the forefront of investing strategies. Factor investing is now accessible to everyone including the smallest of investors.

  • Our institutional-grade strategies are based on the principle of factor investing, a methodology that uses a stock’s underlying rewarded risk exposures to build the optimal portfolio.
  • Because we offer direct indexing through fractional shares, we can implement our multi-billion-dollar factor-based strategies now also for  individual investors.
  • Typically offered by other (robo) providers as a premium service, we provide all FutureSafe investors access to our factor investing strategies (also referred to as “smart beta” strategies) at no additional charge.
 

Tax Advantages

Direct Indexing gives the investor a choice around what stocks to hold and what to sell. This flexibility permits the investor to utilize well known tax- management practices. An estimated 1.5 and 2% in additional after-tax returns can accrue for a typical US-based taxable investor.

  • Long-Term Capital Gains management
    Securities held for over a year are taxed at long-term rates (compared to much higher ordinary income rates for securities held less than one year). Optimal’s strategies are built in such a manner as to target long-term holdings wherever possible, and make short-term sales the exception.
  • Tax loss harvesting
    The investor capitalizes on opportunities created by the varying returns of individual stocks that underlie the index. In a Direct Index implementation, stock losses can be realized (or ‘harvested’), offsetting taxes from other gains the investor may have incurred, either within or outside the portfolio. The longer an investor can delay realizing gains, the more valuable tax deferrals become (think of these as an interest-free loan). An investor can work with Optimal to defer specific sales, giving rise to this tax postponement option, and allowing investments to compound on a pre-tax basis or coincide with anticipated tax events.
  • Optimize gifting to a donor-advised fund
    Optimal can work with the investor to gift the most appreciated shares over a specified time period, to a charity or donor-advised fund. This means the donate can most tax-efficiently gift her or his (e.g. the most appreciated) shares, in a much more flexible way than if, for example, a single ETF was held.