FAQ

1. Is IskraIndex an investment advisor?

IskraIndex operates as a technical service specializing in portfolio optimization. Because IskraIndex offers standardized model portfolios, does not request any client information other than an email address, and does not perform client risk-profiling, its activities do not require a regulatory license. For personalized portfolio optimization, IskraIndex refers clients to partner companies, including regulated entities within the EU. These licensed advisory firms are fully authorized to implement the IskraIndex methodology.

2. Does IskraIndex determine the client's risk profile?

No, because IskraIndex does not request any information from the client. The client can only take an indicative test in their personal account, which will roughly show their level of conservatism or aggressiveness.

3. In which countries can the IskraIndex solution be used?

Any person with a brokerage account that has access to global markets can subscribe and follow the model portfolios of IskraIndex.

4. Is it necessary to transfer money to IskraIndex for portfolio management?

No. One of the key advantages of the IskraIndex solution is that the investor retains full control over their funds, managing them through their own brokerage account, and does not entrust them to anyone else.

5. What is the fundamental difference between the IskraIndex service and the American services Betterment and Wealthfront?

All of the mentioned services offer solutions based on model portfolios consisting of index ETFs. This is the only thing they have in common. Betterment and Wealthfront offer index portfolios under a discretionary management model, which requires transferring client funds to these companies' accounts. The IskraIndex model involves the investor independently following the company's model portfolio via their own brokerage account.

IskraIndex relies on a broader set of ETFs (asset classes), its own portfolio optimization and construction methodology, as well as a risk management system. The main thesis that IskraIndex seeks to convey to investors is that the flip side of the extremely low cost of Betterment and Wealthfront's robo-advising is the quality of their investment portfolios. You can learn more about the comparison of the aforementioned services here.

6. How to get access to the IskraIndex model portfolios?

To do this, you need to subscribe to the IskraIndex service on the website or via Email. After payment, you will receive registration details to access your personal account, where the entire history of each portfolio in the respective IskraIndex lineup is saved. Furthermore, the company will duplicate this information to the client's email.

7. How often are IskraIndex portfolios rebalanced?

Once a month or in case of market-stress events.

8. Why is Bitcoin used as the sole instrument for the "Cryptocurrencies" asset class?

Indeed, one of the main conditions for the applicability of the Iskra Index model is working with asset class indices, which involves combining (summing) a large number of instruments. It is precisely this that makes the return distributions of indices close to Gaussian. In the case of cryptocurrencies, it would be more correct to use an ETF on a certain index, but such an ETF does not yet exist. However, the return distribution of Bitcoin is symmetric, and what distinguishes it from a normal distribution are only its excess kurtosis and more pronounced tails. As a result, the impact of the non‑Gaussian nature of Bitcoin's distribution on the expected return and portfolio risk manifests as a potentially "understated" risk for portfolios along the entire efficient frontier, but should not significantly affect their composition. In practice, the share of Bitcoin in Iskra Index portfolios is very small, and the impact of the non‑Gaussian character of its distribution is, in fact, not significant. As soon as a large and liquid ETF on a basket of cryptocurrencies appears on the market, it will immediately replace the ETF on Bitcoin.

9. What is the minimum recommended investment horizon for Deposit+ portfolios?

Nine months. The distribution of returns for 9-month investment periods over the last 7 years shows that the probability of achieving the target return for them is 65% (which is significantly higher than 50% of a normal distribution), and the probability of negative revaluation is only 8%. For more details, see here: https://iskraindex.com/news/stress-test-of-iskra-index-are-deposit-portfolios-suitable-for-short-term-investors.html

10. What is the easiest way to calculate the trade sizes for each security within a portfolio?

The easiest way is to install the American application TradingView. It allows you to use a rebalancing calculator without a subscription, and it uses current quotes. In the Indicators section, simply type "Asset Allocation Calculator" in the search bar. It will take no more than 10 minutes of your time to get the hang of it. However, some premium brokers can accept a trade order for portfolio rebalancing in the same format as the portfolio structure reports published by IskraIndex.

11. How does a subscription to the service work?

Premium plan subscription costs $2,000 per month for one model portfolio, Iskra Index. An upfront annual payment comes with a 10% discount.

If at the end of the year the return of the Deposit+ model portfolio is lower than the return of the S&P one-year U.S. government bond index (^SPBDUS1T), IskraIndex refunds 80% of the annual subscription fee to subscribers.

To subscribe, you have to send a request to subscribe@iskraindex.com specifying the desired model portfolio (Deposit+ or Idea) and risk level (for Deposit+ portfolios only), as well as the subscription period (monthly / 1 year).

12. Why can I, as a client, trust a startup that has nothing behind it but the right words and pictures?

As a client, you maintain full control of your assets within your own brokerage account. Your portfolio consists exclusively of the largest ETFs in each asset class, eliminating any liquidity risks for your investments. Furthermore, Deposit+ portfolios will never contain more than 50% of any single high-risk ETF.

Ultimately, your only financial risk is the cost of the IskraIndex subscription. For Deposit+ portfolios, half of this subscription fee is refunded if the annual return underperforms a standard bank deposit.

The IskraIndex model reduces the counterparty risk between the client and the service to a fraction of what you would typically experience in traditional relationships with banks, brokers, or asset management companies - where clients often struggle just to reach a human manager through a wall of automated bots and call centers.