IskraIndex: A New Era in Personal Index Investing

Interview with Founders Dmitry Morozov and Andrey Stoyanov

 

In January 2026, a new technology project in the field of personal investing on global markets was launched, aimed at unlocking the benefits of index investing for individual investors. Polina Ladenburg spoke with the authors of the "IskraIndex" project, Dmitry Morozov and Andrey Stoyanov, about how and why the idea and company emerged, its place in the market, and much more.

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– As I understand, the project was conceived five years ago?

DM: We were preparing to launch IskraIndex in February 2022, but, for obvious reasons, it had to be postponed. In the summer of 2025, we decided to revive the project because the optimization ideas laid out 5 years ago proved to be absolutely correct – during this time, our model portfolios showed excellent results. Let's say the project was time-tested. In December last year, the company "IskraIndex" was registered in Kazakhstan, and now we are starting full-fledged work.
IskraIndex offers, on a subscription basis, index model portfolios based on the largest ETFs of global asset classes, allowing to significantly outpace deposit rates with very restrained risks by the standards of passive portfolios with fixed allocations to various asset classes. Essentially, these are index model portfolios with a very high premium to the risk-free rate per unit of risk.

 

– A startup in one of the most competitive areas – isn't that too ambitious a task?

AS: A couple of years ago, I quite accidentally watched an old American film built around the U.S. legal services market. It's hard to imagine a more competitive market for intellectual services—in a country obsessed with legal battles. Tens of thousands of law firms fight with each other and manage to survive, and any non-standard move immediately raises them to a new level.
The main thing that IskraIndex offers is an alternative to bank investment products, such as structured products, various funds, and personal brokerage. Most clients don't realize they are leaving 3-5% annual returns to the banks in these products. Many people don't have the time or opportunity to manage their portfolios themselves, and IskraIndex enters precisely this niche—with its exceptionally high-quality model portfolios. If this sounds like a bold claim, just look at the historical charts. Essentially, IskraIndex offers not only an ETF optimization model but also several significant innovations, both in the very approach to modeling and optimizing portfolios and in its "packaging": pricing policy and client service.
We want to combine our solution with preserving a "human" approach in client relationships; this is not robo-advising. We look to major American services like Betterment and Wealthfront as benchmarks, and our model portfolios compared to theirs are like a transistor versus a vacuum tube. We understand these services manage assets of $65 and $90 billion, making it difficult for them to rebalance portfolios of that scale quickly. But those are problems with their business model.
We estimate the capacity of our model at $300-500 million and expect it could be significantly higher as ETF market assets and liquidity grow.

 

– Imagine I'm your potential client. Try to explain to me how to invest properly without investment banks :)

DM: Most people know what a deposit is and also have an idea that investing in the stock market is a more profitable but riskier type of investment. Two extremes that often live in investors' heads under the influence of economic crises: either a risk-free investment or an extremely risky one. At the same time, if you calmly calculate the return of, say, a 90/10 portfolio (government bonds/stocks), it turns out that it has been more profitable than renewable 2-3-year deposits.
People's fear of the word "Stock Market" is further heightened by the fact that it seems to them – not only is it all risky, but you also have to know how to choose those stocks and those bonds! For quite a long time, all sorts of unscrupulous brokers and management companies have taken advantage of this – we are professionals, entrust us with your money and we will earn high returns for you. And you will pay a fee for this – for management and/or its success. In fact, it turns out that the main task of these "professionals" is to ensure profit for their own business at the client's expense. If one focuses on index returns, the client cannot receive returns in investment products higher than the index even before deducting bank commissions, because a traditional manager cannot consistently outperform the index even over several years. That is why, when so-called passive index products – ETFs, or exchange-traded index funds – were invented several decades ago, the process of a financial revolution began throughout the world. From that moment on, the private investor gained the opportunity to independently invest in indices of asset classes, significantly reducing investment costs. However, this revolution has been very slow to penetrate the level of wealthy clients and large accounts, which were and still are the main cash cows of investment bankers.

 

 

– You said that professional managers cannot provide returns above the index. Why have people put up with this for many years and decades?

AS: Investing is a probabilistic process. It has certain long-term average indicators, which, as a rule, are achieved over sufficiently long time intervals. To show a result better than the market average, a manager must anticipate the amplitude of market movements and their duration. To outperform the market over a 5-year horizon, it is necessary to calculate at least 10 moves ahead – this is equivalent to two active decisions (buy or sell) in each of the next five years. Each decision has 3 states – the amplitude of growth and the amplitude of decline, and the duration of each. The manager must sell at the peak and buy on the decline and vice versa. Suppose the probability of success for each decision is 80% (which is very high in reality). Then the probability that the manager will make 10 correct decisions in a row is 0.8^10=0.11 – that is, 11%. You trust a person with money with an 11% probability over 5 years of getting a higher return than the index. This is not to mention that in reality, the probability of success for each of the manager's decisions is no higher than 50% – markets change quickly and are irrational, and all the historical or even successful experience of a professional manager is meaningless. One mistake can easily negate even 9 consecutive correct decisions out of 10. Unfortunately, internal greed and ignorance of this simple arithmetic lead investors to waste time. And time is the most important and irreplaceable investment category.
It was precisely the weak awareness of people that allowed and still allows the portfolio management in its classical form to exist. In the last 10-15 years, the situation has been changing – with the advent of exchange-traded funds, the income of management companies began to decline. And to compensate for them, they led this process – they began to issue hundreds of types of their own ETFs, offering the client "products for every taste." Indices for market sectors, customized indices are created, and exchange-traded funds are issued based on them. Today, thousands of such funds have been issued worldwide. The investor is lost again and, bowing his head, goes to management companies or brokers to compose and choose a portfolio, trying to compensate for their missed income or losses. Instead of focusing on a portfolio of 10 basic indices (funds) of asset classes providing maximum diversification.
One of our main tasks is to convey these simple things to people so they can make an objective decision on what form of personal investing to choose.

 

 

– I understand that classic index investing is convenient: there aren't many indices, but what is the advantage of a portfolio of indices (index funds) over a portfolio of individual bonds and stocks?

DM: The S&P500 index includes 500 stocks. Imagine that a stock with a weight of 10% suddenly falls by 50%. Your portfolio will lose only 5%. But at the same time, among these securities, there may be one that grows by 50% during the same period. An index allows reducing the so-called specific, or individual, risks of individual securities to zero. The more stocks in a portfolio, and the more they differ from each other, the stronger the diversification of the portfolio. Asset class indices (stocks, bonds, real estate, commodities) have such a high degree of diversification that adding new securities to their composition will no longer reduce the specific risk of the index.
Buying an index is investing in an entire market or asset class. If you invest in a portfolio of several indices (index funds), you reduce the specific risk of entire asset classes by diversifying between them.

 

– And what does IskraIndex do?

DM: IskraIndex finds the optimal combination of index ETFs and regularly (usually monthly) updates it. Indexes rise or fall over time, and their returns deviate from a certain long-term average. Accordingly, an index that has deviated upward or downward deserves a smaller or larger share in the index portfolio. This is a probabilistic model, but it has proven its exceptionally high effectiveness. All our portfolios have a Sharpe ratio around 1.3 – put very simply, this means the portfolios earn 30% more than their level of risk. In terms of absolute figures, the average annual dollar return of the conservative Deposit+ portfolio since July, 31, 2019 is 9.8%, and the balanced portfolio’s is 13.9%. If an investor chooses an aggressive portfolio, its return would be around 20% per annum. But the most important thing is not the absolute return, but the risk of the portfolio. If risk is measured as the maximum decline in the portfolio's value from a previous local peak (so-called drawdown), then for the conservative portfolio it was 9.5%, and for the balanced portfolio – 13.6%. For comparison, the global bond index grew on average by 0.8% per year during this period with a drawdown of 16.2%.

 

 

– How many indices are in your portfolios?

AS: Portfolios are composed of 10-11 index funds representing both classic stock and bond indices of developed and emerging markets, as well as real estate indices, commodity markets, and bitcoin. In reality, the portfolio usually includes no more than 5 ETFs.

 

– How many model portfolios do you offer?

DM: We have two portfolio lines. Conservative and balanced portfolios are part of the Deposit+ line; these portfolios aim for a premium to the deposit, which historically for conservative portfolios has been more than 6 percentage points, for balanced ones – more than 11. If a client is interested in an aggressive portfolio, we offer choosing an Idea portfolio – this is either a more aggressive version of the Deposit+ portfolios or an optimized combination of one of several investment ideas with the Deposit+ portfolios. This could be a constant presence in the portfolio of a bitcoin ETF with a share of at least 10%, or a fixed share of gold. By the way, our Idea portfolio with a 30% share of a gold ETF, against the backdrop of a unique rise in gold prices, only slightly lagged behind a portfolio of 100% gold in terms of average annual return (17.5% vs. 18.5%), but at the same time was significantly more effective: its Sharpe ratio (remember? – this is the return premium per unit of risk) was 30% higher. This is an absolutely unique solution when you reduce the risk of buying a single instrument, practically preserving all its potential if it unexpectedly shows exceptional growth. However, the opposite happens much more often – guessing an exceptional investment idea is practically impossible; over a long horizon, growth will be replaced either by a sharp fall or sideways movement, resulting in lost time and opportunities. With our portfolios, you can limit the risk of an unsuccessful bet on one idea and recover possible losses within a reasonable time at the expense of the rest of the portfolio.

 

– How does your service work in practice?

AS: The investor chooses a model portfolio they like from our range, subscribes to the service, and receives a report on the portfolio's structure. The most important thing is to regularly update their actual portfolio to reflect the changes in the model portfolios. We inform clients about these changes by email, or by phone if they prefer. This usually happens once a month.

 

– How complicated all this is!

DM: Let's imagine you are buying a durable good – a car, a refrigerator, a TV. You need to learn their characteristics, evaluate their appearance, talk to salespeople. You don't imagine all their features and capabilities! Long-term investment requires some immersion in the features of the "product." We want to achieve a situation where a person can understand how IskraIndex can help them in 10-15 minutes. That's no more than choosing household appliances. Having chosen a model portfolio and bought their own portfolio of several index funds based on it, the investor can forget about all further complexities: they only need to update the model portfolio once a month and perform rebalancing. This should take no more than 15 minutes of time. We offer ready-made index model portfolios, like in a supermarket, and the cost of this service is negligible compared to the cost of trust management services. And what's no less important – we will never reach into the investor's pocket!

 

– Does the investor need to buy the real portfolio themselves?

AS: Yes. We are considering the possibility of launching funds based on our model, but we always keep two things in mind – a fund is, as a rule, an offshore (questionable) jurisdiction, and the cost of its maintenance will be significant. The client will save on taxes, but at the price of high legal risks and fund maintenance expenses. So if a client knows how to handle a brokerage account and has nothing to hide, why would they need that?
Over time, we should come to the tokenization of the IskraIndex model, where buying an index portfolio will be possible in crypto space. But for now, given the level of expenses, this may only be profitable for very large investors.

 

 

– Suppose I have formed my portfolio of index funds based on the model one, what do I do with it next? How long to wait to reach the target return?

AS: Then you monitor the portfolio's condition, reinvest dividends, top it up with new money, or withdraw funds. Just like with a regular deposit. The only difference – once a month you need to compare the real portfolio with the updated model one and rebalance it in case of significant deviations. This is necessary to constantly maintain the best risk-return ratio.
I like to give this example. If your risk profile is neutral or risk-seeking, you may have a significant share of stocks in your portfolio. The stock market experiences sharp movements, which, as we said above, are impossible to catch. But if you systematically and regularly rebalance the portfolio to the model one, then sharp deviations in the stock share due to their rise or fall from the target share over time convert into increased returns.
In the "Performance" section of our website, there is a good graph illustrating how important rebalancing is. Its effect can be seen on the "Idea: Bitcoin" portfolio as an example, but it works the same for all portfolios. So, since August, 2019, a portfolio with monthly rebalancing grew by 184%, and without it – by 90%. Moreover, the graph clearly shows how this effect accumulated over time and was not the result of one-time events.
Calculating trades for rebalancing will take, as I said, a few minutes, and some more time – executing these trades through the broker. And again, you can forget about it for a month.

 

– And how long do you need to wait to reach the average annual historical return?

DM: We guide clients towards a 3-year timeframe based on our test track of portfolios over almost 6.5 years. This period included unprecedented market stresses not seen in the last 50 years – the COVID pandemic, trade and real wars, and terrorist attacks worldwide. And despite all this, only in one calendar year was the deposit more successful than the conservative IskraIndex portfolio. Any three years during this period for all our model portfolios roughly corresponded to the average annual indicators for the entire observation period.

 

 

– What is the profile of your potential client audience?

AS: We are targeting clients who have access to the U.S. stock market and hold at least $2 million in assets - these are clients in the so-called HNWI segment. For such clients, the cost of our service will not exceed 1.2% per annum. If a client invests more, their relative expenses for our service will be proportionally lower, as the cost of the service for individual investors is fixed.
These are investors who already have experience with independent transactions in the American stock market and would like systematic and effective investing. Many of them work under the pressure of the personal broker service, which is a rudiment of the last century. Our project is absolutely global; any investor from any country can subscribe to our portfolios. Our website supports three languages – English, Russian, and Turkish – I think that's enough for the first stage.
Secondly, we are targeting managers of smaller family offices, who also need a systematic investment approach. We would also like to see large brokers among our clients, as they are interested in increasing the activity of their client base and improving the margins of their products, especially for conservative clients.

 

– Thank you for the interesting conversation, I will follow your project!

 

 

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