As the online personal finance world grows, we’re starting to see some very interesting opportunities for investors. I recently received an email from a company with a business proposition that is different from what I typically review but found myself interested in their business proposition and marketplace niche. The company is Wunder Capital Investing. I wrote a short executive summary and then turned over some space to Ilyas Frenkel at Wunder Capital.
Wunder Capital Investing Review
Executive Summary
Wunder Capital is an online investment platform for the Solar Energy market. Accredited investors can invest in two different solar funds:
Wunder Income Fund – Target Return of 6%
Wunder Bridge Fund – Target Return of 11%
Minimum Investment is $1,000.
Investment terms are 2 years or 10 years.
No investment fees.
Wunder Capital is an investing company and a solar energy company. Your investments in Wunder go directly to solar energy projects across the country. As those projects are built your investment is having a direct positive impact on the environment and helping to combat global climate change.
(Wunder 60 second explanatory video)
Detailed Review from Ilyas at Wunder Capital
This review will dive into what exactly makes Wunder Capital unique in the marketplace. We’ll touch on some important factors that have made Wunder Capital successful. We’ll also dive into a detailed discussion of Wunder’s two solar funds.
— What is Wunder Capital?
Wunder Capital is a financial technology company that provides financing to solar projects throughout the country. Based in Boulder, Colorado, Wunder allows accredited individuals, trusts, family offices, foundations, hedge funds and pension funds to invest in the country’s new solar infrastructure. Wunder was founded in 2013 and won the U.S. Department of Energy’s 2014 Sunshot Challenge, the COSEIA’s 2015 Summit Award and was the first solar technology company to complete the Techstars technology accelerator program. Wunder’s software-based approach is dedicated to removing logistical barriers and cost to solar investing, passing the savings on to investors.
— How Does Wunder Capital Work?
Wunder works with solar installers, developers, and distributors across the country to source strong solar projects. Once Wunder’s solar specialists have identified high quality solar projects in need of financing, they run the loans through a rigorous underwriting and quality assurance process. Once they’ve identified an opportunity that meets their demanding standards, they negotiate the deal, handle the legal contracts, and wrap it up into a fully-managed investment fund that includes other standout investment opportunities. Wunder Income Fund (Target Return of 6%)
Invest in a diversified portfolio of commercial solar systems that service some of the most stable businesses in the country. This solar project portfolio provides targeted monthly cashflows of 6% annually for 10 years, and it significantly reduces carbon energy pollution – aiding in the fight against climate change.
The Wunder Income Fund is a safe choice for investors looking for monthly cash-flows and a low risk investment. Unlike investing in a mutual fund, Wunder Capital won’t charge you any fees for investing your money. You’ll receive monthly cash-flows deposited directly into your bank account.
Wunder Bridge Fund (Target Return of 11%)
The Wunder Bridge Fund provides investors exposure to a portfolio of asset-backed commercial solar loans. These loans are provided on a project-by-project basis to commercial solar installers that Wunder has partnered with, and each loan is secured by the installer’s assets. Capital is used for new project development activities, such as system design, hardware procurement, and system installation.
The Wunder Bridge Fund is for investors who are a little more risk tolerant than investors who’d invest in the Wunder Income Fund. The fund’s target return is 11% annually over a 24 month term. Just like with the Wunder Income Fund, the Wunder Bridge Fund has no fees. You’ll receive your monthly cash-flows deposited directly into your bank account.
The Kinds of U.S. Businesses You’re Investing in with Wunder Capital
Who Should Consider Investing in Wunder Capital
Wunder Capital is a great investment alternative to the market. Wunder’s solar funds are asset backed so market fluctuations don’t affect your return as an investor. Your investment with Wunder goes directly to healthy U.S. businesses to help them finance solar panel installations. If you invest, your investment helps to curb pollution and reduce carbon emissions. Wunder Capital is a great fit for anyone interested in Impact Investing, Socially Responsible Investing (SRI), or someone simply looking to diversify their assets and earn a strong return.
PersonalCapital.com offers personal financial services for a lower cost than the typical financial adviser by using proprietary software to make investment management decisions. You can track your investments and expenses for free on their site and users are now tracking over $100 billion on their free software. Additionally, Personal Capital now has over $1 Billion in managed investments as well. If you sign up they also provide you with a free assessment of your portfolio to check asset allocation and to see if you are on target for retirement. They also have a Mutual Fund fee analyzer and a 401k analyzer to help you see if you are getting charged too much.
If you decide to go with their investment management services, you’ll receive personalized recommendations for fees below industry averages. Asset management fees (discussed below) are a little less than 1% of the value of the assets under management. Personal Capital Advisors now manage over $600 Million in assets for individuals and families. As Registered Investment Advisors, they are obligated to act in your best interest.
Personal Capital is a next generation financial advisor. By taking advantage of technology, the company’s fees are lower than the typical advisor but you still get personalized service. It’s great for anyone looking for better clarity on their financial situation and is targeted towards individuals and families needing a more hands on approach to asset management, but want lower fees than the typical investment adviser.
Personal Capital provides a number of free services including:
1. Free Investment Checkup – See if you are on target for retirement.
2. Free Expense Tracking – Like Mint.com, Personal Capital puts all of your accounts in one place and allows you to track your expenditures.
3. Free Financial Planning – The free services include asset allocation review, mutual fund fee calculator, and a 401k analyzer. These services help you optimize your portfolio to lower fees and improve performance.
4. Free Net Worth Calculation – With all of your accounts in one place you get a clear picture of your net worth.
5. Free Mobile App – Personal Capital’s mobile app is an award winning personal financial management tool (and one of my favorite apps).
The paid service is primarily investment management. I’ll go over the graduated fee scale based on portfolio size more below.
Does Personal Capital provide a summary of my financial position?
The Personal Capital Dashboard gives you a great summary of your net worth, spending, and portfolio balances.
Yes. Personal Capital provides an excellent personal financial summary. They track spending, net worth, and investment portfolio. The emphasis for personal capital is primarily on the investment side so the budgeting and expense planning is not as robust, however, the user can easily track expenses and cash flow with the automatic categorization. It will be interesting to see what changes are made as the software goes forward because the CEO was formerly with Intuit, the current owner of Mint.com. Personal Capital’s focus on portfolio management provides a level of service that Mint does not have.
The summary pages are very clean and user friendly. The financial aggregator is also easy to use and you will be able to quickly get investment portfolio into their system.
Investment Management Services
The minimum required for investment management services is now just $25,000, a significant decrease that puts Personal Capital in line with their competitors. Investors with at least $25,000 in investable assets receive access to:
– Portfolios composed of ETFs that are designed to take advantage of asset location, tax loss harvesting and disciplined rebalancing
– Access to Personal Capital’s full suite of financial planning services
– A licensed Advisory Service Team to answer questions and advise clients on college planning, estate planning, home purchases, 401k allocation, and more
You will see a lot of news in the press calling Personal Capital a robo advisor, and while the company uses computer algorithms to help with portfolio allocation, you get the human touch with access to licensed advisor. Other online financial advisors are starting to copy this model as the demand for the personal touch is not going away any time soon.
There are also no performance based fees, meaning that you won’t be charged a premium if your portfolio reaches certain targets. That’s not to say that the investment management is free (see below). The company’s focus is on asset allocation, portfolio diversification, and tax optimization as opposed to analyzing individual securities.
How Much Does Personal Capital Cost
Opening an account is free so you’ll track your money and your portfolio free of charge.
How Much Does The Investment Management Service Cost
The fees have been simplified as follows:
First $1 Million: 0.89%
For clients that invest $1 Million or more:
First $3 Million: 0.79%
Next $2 Million: 0.59%
Over $10 Million: 0.49%
The fees include everything. There are no additional charges for trades or fees.
The fees are cheaper than standard personal financial advisors so you can feel confident that their investment management is competitively priced. I’ve written another piece summarizing a Wall Street Journal article on fee structures for financial advisors.
Personal Capital’s Investment Philosophy
When you invest with personal capital, your portfolio will contain a combination of individual stocks and Exchange Traded Funds (ETF). The portfolio will be designed by their Investment Committee based upon your conversations with your Financial Advisor. Your money is held by Pershing Advisor Solutions, a Bank of New York Mellon Company. Pershing is one of the largest US custodians, with over a trillion dollars in global client assets. Personal Capital never directly takes custody of client assets, and only you have access to your money.
They look to help the user create a “Personal Fund” and a “Personal Strategy.” It’s really a personal financial plan and it’s free. The company describes the Personal Strategy as:
“A comprehensive investment portfolio designed specifically for you. It’s the way wealthy families and endowments manage their money – from the top down. Strategy first.
We start with a 360-degree view of your finances, and assess your goals. Then we custom-build a portfolio to match those goals, based on the time-tested principles of diversification, risk control, tax savings and low cost.”
The Personal Fund is described as:
“A Personal Fund is a managed portfolio of stocks and ETFs with a targeted investment objective. Unlike a mutual fund, you own the securities themselves rather than shares of a mutual fund.
Because you own the individual securities, a Personal Fund is customizable, tax efficient and less costly than a traditional mutual fund. For investors with $100,000 or more, Personal Funds offer a better alternative to mutual fund investing.”
Clearly this is the beginning of a seismic shift in personal financial management. The typical financial advisor charges quite a bit in fees. Personal Capital looks to lower the cost for individuals by leveraging the power of the technology.
Personal Capital is worth using if you are looking to shore up your future by creating a personal financial plan that requires asset and portfolio management. If your goal is to pay down credit card debt or to simply live within your means, you may want to start a Mint.com account. However, if you are looking for long term advice, it makes sense to get started with Personal Capital in order to leverage their professional investment management advice for free. Again, emphasis on the ‘free’ personal financial plan, regardless of the size of your portfolio.
I spoke with an investment advisor from Personal Capital and had a great experience. The advisor was friendly and easily communicated the company’s investment philosophy. You have a free consultation available when you sign up with Personal Capital’s account aggregation software so after you load your accounts, take time to speak with their advisors and see if it is the relationship that you want. In general, Registered Investment Advisors are the best way for individual investors to manage their money. Personal Capital is leveraging people and technology to lower fees and provide a great service.
Is my personal information safe with Personal Capital?
When I tell people about online personal financial tools, their biggest concern is that their information will be stolen. It is an important question and a serious issue. Personal Capital’s information security standards are the same as or exceed most banks. Chief Executive Officer, Bill Harris, and Chief Technology Officer, Louie Gasparini, are the former founders of PassMark Security, which specialized in on-line authentication and created the authentication system used by most banks.
Personal Capital requires multiple authentication steps when you are logging in, which is consistent with the best banks. The two steps verify your password and then verify your computer. If the computer is not recognized, an additional verification is required for safety.
The company also ensures security through firewalls, data encryption, and constant monitoring of their site.
The information security at personal capital is very good.
In the end, it’s worth opening an account with Personal Capital. You get access to professional software that helps you to build a personal financial plan, track your investments, and review your expenses. As your portfolio grows, you’ll have access to professional investment management to assist you on your journey to financial freedom.
Wunder Bridge Fund (Target Return of 11%)
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