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And his pitch to investors can only ever be a few sentences long, including the promise to outperform the market by 2 percent excluding costs. The fee is 0.25 percent, very moderate and comparable to ETF standards.

In short, Simag offers a product that costs as much as an ETF but performs slightly better. «We hope to get institutional clients to exchange some of their index funds,» Gast said.

He believes that the market has reached saturation, having grown about 19 percent a year from 2008 through 2018. In future, that rate of growth will half, Gast added.

Herd Mentality of Investors

Simag believes that the super computer can detect patterns in the markets that human investors can’t see. Leverage of borrowed capital, liquidity in the markets as well as psychological phenomenon such as herd mentality and short-term memory of investors are examples mentioned by Simag.

The Zurich-based startup has put together a computer that looks into the performance of 7,500 stocks worldwide, analyzes patterns at work and compiles portfolios of 150 shares according to a points system. From this portfolio, the system selects 10 percent with the biggest promise, while the 10 percent with the biggest downside potential receive a negative weighting.

Avoid the Traps

The procedure is repeated on a daily basis, and the makers of Simag hope that this will help it avoid the traps of the market. Gast said that the system works and that investors are happy to take the 2 percent after costs. Simag has attracted 100 million francs in client assets for two funds and Gast hopes to take in even much more soon.