Emperor Investments Review
  • Cost
  • Ease of Use
  • Performance/Risk
  • Diversification
  • Customization
3.4

Summary

Automated investment platform, Emperor Investments, sets itself aside by focusing on stocks rather than ETFs. With a combination of other features, many are wondering how they stack up to other robo-investment services. We’ve done the research, now read our thorough review of Emperor Investments.

About Emperor Investments

Emperor Investments is an automated investment platform that focuses on investing directly in stocks rather than ETFs. The service was founded in 2011 by CEO Brenna Casserly and CIO Francis Tapon. While Emperor Investments bills itself as one of the cheapest and highest-performing robo-investment services, these claims are debatable and the platform does not publish its total assets under management. What Emperor Investments does offer that differentiates it from competing services is a highly customizable all-stock portfolio.

How Emperor Investments Works

Emperor Investments is an automated investment platform that, like other robo-advisors, automatically invests your money in a diversified portfolio. What makes Emperor Investments different is that your portfolio is built entirely from large-cap US stocks, rather than from a mix of ETFs or a mix of asset classes. This means that your investments are largely subject to the ups and downs of the stock market, and Emperor Investments is using diversification across multiple industries to hedge against risk. Fundamentally, this is a much more high-risk, high-reward strategy than that offered by Betterment, Wealthfront, or a host of other robo-advisors.

Emperor Investments starts investors out by asking some basic questions about your investing goals and risk tolerance, much like any other robo-advisor. From that, Emperor Investments recommends a suitable portfolio that is more or less diversified among industries – although again, it’s important to keep in mind that your portfolio is not risk-balanced against broad stock market declines since all portfolio assets are US stocks.

Emperor Investments Recommended Portfolio

Taking that portfolio of sub-industries and deciding what stocks to invest in is done behind the scenes in Emperor Investments. The platform will automatically recommend individual stocks, which are picked by the Emperor Investments team. You do have the ability to override individual stock decisions, which is one of the ways in which this auto-investment platform gives its users more customization power. However, any investors who are informed enough to make stock-picking decisions would be better off purchasing those stocks through a brokerage as opposed to using an automated investing service.

Emperor Investments Detailed Portfolio

Account Requirements

Emperor Investments require a $500 minimum investment and are only open to US residents at this time. You can open a traditional investment account, joint account, traditional IRA, or Roth IRA with Emperor Investments.

Emperor Investments Pricing and Fees

Emperor Investments charges all investors a 0.6% annual management fee, with no additional fees or commissions for purchasing stocks. The platform claims that this is the lowest fee among automated investing platforms, but both Betterment and Wealthfront are significantly cheaper even after accounting for ETF exchange fees (0.45% annually or less). It’s worth looking at the 0.6% fee as primarily going towards stock picking, in which case it is extremely high compared to dedicated stock picking services.

Platform and Tools

Emperor Investments offers a few basic tools so that you can monitor your investments over time, change your portfolio balance preferences, or invest in particular stocks. The main dashboard shows your returns over time, including the amount of money that you have received directly in dividends. As you might expect, dividends are automatically reinvested into your portfolio when using Emperor Investments (although re-investment can also be turned off). 

Emperor Investments Dashboard

Helpfully, you can create multiple goals within your account and assign each of them a different portfolio. Emperor Investments allows you to set recurring contributions from your bank account so that you never have to worry about saving for long-term goals like retirement.

Emperor Investments Goal Setting

Other than that, there is not much to the Emperor Investments platform. You can access your account online from your desktop or on the Emperor Investments mobile app.

Emperor Investments Performance

Emperor Investments claims a performance of 16.85%, although the time period over which such a return was earned is not clear. If this is the year-to-date performance for 2019, that’s almost exactly comparable to the performance of the S&P 500. Importantly, since Emperor Investments invests only in stocks, investors’ returns will depend very heavily on the performance of the stock market as a whole. The amount of risk hedged by investing in a diversity of industries is minimal compared to investing part of your portfolio in non-stock assets, as most other robo-advisors recommend or do automatically.

Emperor Investments Performance

Key Differentiators

The main difference between Emperor Investments and the majority of other automated investing platforms is that Emperor Investments invests your entire portfolio in US stocks. There are advantages and disadvantages to this approach.

On the plus side, Emperor Investments looks for stocks that offer attractive dividends, so investors will see fixed income in the form of quarterly payouts. These dividends can also help to offset losses in the value of individual stocks. The other big advantage to investing directly in stocks is that you have a lot more freedom to determine the specific industry balance of your portfolio and which individual stocks you would like to invest in.

The downside to stock-only investing is that it is a high-risk, high-reward strategy. Emperor Investments does not make this clear to investors. When investing in the stock market alone, even if your money is diversified into different industries, any downturn in the market can have an enormous impact on your portfolio. This is why the vast majority of automated investing platforms allocate a portion of your portfolio to bonds, real estate, or even cash.

Emperor Investments vs. Betterment

By this point, it should be clear that Emperor Investments utilizes a “higher risk, higher reward” investment strategy. This exchange should be expected in the world of investing. It’s rare that you can seek higher rewards without taking on higher risk. So, how exactly does this investment approach compare to robo-advisors like Betterment?

There are two things to consider.

First, let’s look at diversification and risk management. Betterment offers more diversified portfolios that allow clients to choose their own risk scores. These portfolios are built by combining ETFs with different risk scores. For example, a Tech ETF may increase the overall risk score whereas a bonds-based ETF may decrease the overall risk score. Betterment clients can choose their portfolio strategy and the company will rebalance the portfolios based on market conditions. Of course, Betterment does not allow investors to add individual stocks to their portfolios.

Emperor Investments stands out because of their heavy focus on individual stocks. The company claims to be able to offer stock picks that will beat the market. This is certainly an appealing proposition, but there are a couple caveats. First, Emperor Investments charges a 0.6% management fee which is more than double the management fee of Betterment and comparable robo-advisors. Second, Emperor Investments has only been in business since 2011, meaning the company has only operated during a bull market. The market has pretty much gone straight up during that time and it’s been relatively easy to make a killing with popular stocks like Apple and Amazon.

This isn’t to say Emperor Investments will not thrive in bearish market conditions, but it’s an important consideration nonetheless.

Trustworthiness

There is no reason to distrust Emperor Investments and you can easily withdraw your money from the service. However, the company’s failure to directly inform investors – many of whom are looking for a robo-advisor because they are not well-educated about investment options – about the risks of stock-only investing seems slightly disingenuous. Offerings are described as having “bond-like security,” which is extremely misleading. There’s nothing wrong with a little bit of marketing flair, but stock portfolios are never as secure as bond portfolios.

Emperor Investments is an SEC-registered investment advisor. All investments are insured by SIPC.

We did find it slightly concerning that the company has only reported $621,000 in discretionary assets under management as of December 31, 2018. This is incredibly low when compared to other similar advisors. Betterment and Wealthfront both have upwards of $12 billion under management and Ellevest has over $280 million. While assets under management does not directly correlate with trustworthiness, dealing with a bigger company can provide some peace of mind.

Who is Emperor Investments Best For?

Emperor Investments is ideal for investors who favor the high-risk, high-reward nature of stock-only investing. Typically, this means that Emperor Investments will be most suitable for younger investors who can afford to weather some downturns in the stock market before they need to access their money.

For investors who know how to purchase their own stocks through a brokerage, it becomes a toss-up as to whether doing that is a better option than Emperor Investments. The platform essentially charges 0.6% annually to pick stocks for you, and there are many less expensive options such as Gorilla Trades, Motley Fool Stock Advisor, and Stansberry’s Investment Advisory that offer similar stock-picking services. Some investors may find that the automated nature of investing with Emperor Investments, including re-investing dividends and recurring contributions, is worth the annual management fee.

Pros

  • Automated investing in US stocks
  • High-risk, high-reward investment strategy
  • Stock picking by Emperor Investments team slightly outperforms S&P 500
  • Allows you to customize your individual stock investments
  • Setup multiple goals, each with their own portfolios

Cons

  • Performance is highly subject to broad stock market conditions
  • Expensive for what is essentially a stock-picking service