Behind The Scenes With Dividend Robo Advisor, Emperor Investments

The following is a guest blog post:

The following is an interview with the two co-founders of Emperor Investments, CEO Brenna Casserly and CIO Francis Tapon. Emperor is a robo advisor that uses technology to automate stock picking and focuses solely on dividend paying companies. This post will focus more on the people behind Emperor but you can read the review of the platform itself here.

What are both of your backgrounds and how did you meet?

[Brenna]: I had an interesting childhood as my parents worked all over the world, so we traveled a lot. My parents are from Zimbabwe and South Africa, but I was born in Yellowknife which is far north in Canada. Most of my childhood and education was spent in Ontario where I went to an arts high school and played the saxophone. I didn’t end up further pursuing music and instead did my Bachelor of Commerce at the University of Guelph where Francis was one of my professors. Because of my family’s travel background, I started my finance career in Australia and after a year moved to Dubai. Eventually I missed home, so I moved back to Toronto and started working for one of the large financial institutions in Canada in their wealth management division.

[Francis]: I have a much longer history than Brenna, but I’ll be brief. I was born and educated in France and came to North America to teach Finance in Quebec. I eventually moved to the U.S. to pursue my M.B.A. at Columbia University. However, when I was in Canada, I realized my passion for teaching and academia, so I continued my education and got an M.A. and Ph.D. in Economics and Finance from Duke University. I have been lucky to have a successful academic career as a university professor in Canada, but I have also had a few interesting projects since then; most notably working in the Antitrust Division of the U.S. Department of Justice.

As for how we met, Brenna was a student in two of my classes 11 years ago. As a bit of back story, I attend the Berkshire Hathaway shareholders’ meeting every year and usually take students who are interested since I have a few extra tickets. After graduation, Brenna and I kept in touch and, knowing that I attend the meeting every year, asked to accompany me. It was there in Omaha, within a few meters of Warren Buffett himself, that we decided to launch an investment firm that would reflect our values and of which we would like to be clients ourselves.

Why did you decide to start Emperor and what is the company’s main goal Brenna?

[Brenna]: Coming from the banking industry, I saw a lot of unfair treatment between clients based on their net worth. Currently, custom-made pure equity portfolios that yield a good return along with low volatility are only available to high net worth individuals. If you don’t have upwards of $250,000 in investable assets or the time and knowledge for DIY investing, your only option is a mutual fund, ETF, or robo advisor which builds ETF portfolios. In my opinion, the performance of all these products is incredibly low, especially when you consider all the fees eating away at your returns. This leaves a large amount of people looking for quality investments with high returns unserved. The goal of Emperor Investments is to bridge this gap and democratize high quality investment management to the average U.S. citizen. With Emperor, you don’t need to have six-figure asset pools or more, you can get your dividend portfolio with as little as $500.

What is your investing philosophy Francis?

[Francis]: I am very cautious with money and look at dividend payments as a “bird in the hand, rather than “a capital gain in the bush”. In other words, I almost exclusively invest in high quality dividend paying companies. Since Brenna shares my cautious approach, I apply this same philosophy at Emperor Investments. Promises of capital gains are not enough to lead us to invest in a stock; we find that too volatile. Instead, we select our companies based on the track record of their dividend payments as well as other proprietary criteria.

With the help of our CTO, we were able to automate this approach and bring it to the masses by creating technology to help us narrow down the entire universe of stocks. This includes our own variant of Markowitz optimization which ensures that we are getting dividend stocks at a good price and that our portfolios are well diversified. We still have analysts that investigate the more qualitative aspects of the companies we invest in, but in general, consistent dividend payments are a sign of responsible, quality management.

Why did you choose the penguin as your logo?

[Francis]: I love the cold and have taken several trips to Antarctica over the years. One year, very far south on sea ice, I saw a colony of emperor penguins and they were truly majestic. It was summer, so they had not yet made the trek to their incubating grounds closer to the interior of Antarctica, but I knew the story. The female penguins lay only a single egg before leaving temporarily for warmer seas. This leaves the males to incubate over several months and ensure the survival of their eggs under the terribly cold conditions of an Antarctic winter. During this time, the male penguins are completely self-sacrificing and lose about half of their body fat warming their eggs since they can’t leave to hunt.

At Emperor Investments, our eggs are the nest eggs of our clients and our mission is to watch over them through thick and thin. In my mind, this is the perfect creature to embody the qualities that you want in an asset manager, so it was a natural fit for our brand.

What makes you different from other robo advisors?

[Brenna]: The main thing that makes us different from other robo advisors is that we construct pure equity portfolios. This means that we invest exclusively in individual companies rather than ETFs and therefore, our clients become co-owners of the companies in their portfolios. There are many benefits to this approach but the main one is that it allows us to build more customized portfolios. For example, let’s say Company X in a dividend ETF has a sporadic history of dividend payments and it looks like they will cut in the future. In this case, you have no choice but to accept Company X with the other, better companies in your ETF. Emperor on the other hand, can buy less of or cut Company X and buy more of the better companies when rebalancing. This is just a simple example, but you can see that we can be much more selective and only pick the best for our clients.

[Francis]: Speaking of customization, we not only consider our clients’ attitudes towards volatility, but also their goals when building them portfolios. Since nobody can predict a market crash, it’s important to consider when you will need your money and adjust your portfolio accordingly. If your goal is more long-term like retirement, then we would invest in sectors that have a higher potential for growth but higher volatility. On the other hand, if your goal is short-term, then we would invest in more stable sectors (utilities for example). Goal-based investing is also something that is relatively new to the robo advisor space.

What makes you different from a dividend ETF product like VIG or NOBL?

[Francis]: These two excellent ETFs are concentrated on dividend-paying companies that have grown their dividends over a very long time.  Our portfolios have somewhat similar mandates with some differences. First, the concentration of stocks in our portfolios are much smaller because of our tighter selection process. Also, as I mentioned earlier, we have built a variant of the famous Markowitz algorithm that allows us to overweight cheap stocks and underweight expensive ones. This leads to substantial differences in performance that you can compare for yourself by visiting our website or getting in contact with one of our analysts.

Where can people get more information about the company?

[Brenna]: You can get more information by visiting our website or emailing us at support@emperorinvests.com and our team would be happy to answer any of your questions!

We’re also currently running a promotion that allows you to get your first 6 months of service for free. This lets you try Emperor out and compare the performance of our portfolios to your own or any competing products over the same period. If for any reason you aren’t satisfied, you can close your account and withdraw your assets at any time, completely free of charge.

By spending 10-15 minutes signing up, you could save a huge amount of time researching companies and rebalancing your portfolio throughout the year while still achieving great results. We treat all of our clients like Emperors (the rulers, not the penguins) and we’re committed to doing everything we can to make your dividend investing experience amazing!

2 thoughts on “Behind The Scenes With Dividend Robo Advisor, Emperor Investments

  1. Hi Keith. Not everyone likes to pick, own and hold individual dividend stocks like you and I. I think Emperor’s robo offering is an excellent alternative to individual dividend stocks and dividend stock ETF’s for those types of investors.
    I’m also a big believer that investing strategies do not have to be all or nothing. A few individual dividend stocks, a dividend ETF and Emperor’s offering could make a really powerful and diversified equity income combination for many investor’s. Thanks for sharing the article and have a great holiday.
    Tom
    Tom @ Dividends Diversify recently posted…Get Your Debt Under ControlMy Profile

    • Hi DD,

      Well said. No investing style or strategy should ever be an all or nothing. Rarely is anything in life black or white. Though most if like individual stocks and focus on dividends we also look for value. Does that make us value investors too? This is why we call it personal finance because it is very personal to each individual’s tolerance for risk and investment style. As always, I appreciate your comment.

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