Antigravity Investments: Helping the EA Community Leverage Investing to Increase Funding and Donations

byBrendon_Wong9mo16th Oct 201810 comments

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Background

Antigravity Investments is an EA-aligned social enterprise and SEC-registered investment manager with the mission of driving billions of additional dollars to high impact causes by increasing the accessibility, affordability, and effectiveness of investing for the charitable sector. We have been recognized by American Express and Ashoka for our social impact potential and are backed by EA Grants and the Berkeley SkyDeck accelerator.

We began operating in 2016 by providing advising services to individual EAs in the U.S. and abroad. In 2018, we expanded our focus to providing investment management services to EA organizations and serious donors to create a larger and more direct impact. We are currently looking to increase the number of EA organizations and community members we are serving.

Mechanisms of Impact

A 7% annual return will double an initial investment in just 10 years. As such, the rate of return on the EA community’s capital is of utmost importance because it will have a major impact on the funding available for EA causes in the future. Antigravity Investments aims to improve investing in the charitable space via three primary mechanisms.

Mechanism 1 - Increasing the Accessibility of Investing

People and organizations may fail to access investing because they have not fully considered its benefits, do not understand how to implement an investing program, and/or encounter unexpected barriers. The latter case is best illustrated through the challenges nonprofits face when trying to get started with investing. Most brokerage firms do not even support nonprofits as clients. Those that do may have a complex setup process that can involve filling out dozens of pages of registration paperwork that need to be physically mailed and approved. Once an organization gets access to a brokerage account, discovering an appropriate investment approach, implementing the investment approach, avoiding high fees charged by unscrupulous providers, and complying with regulations are among the new challenges that may arise.

Antigravity Investments aims to address all three scenarios that reduce the accessibility of investing. Our plan involves raising awareness of the benefits of investing for the EA community, conducting direct outreach, providing 1:1 advising, creating educational resources, and most importantly removing barriers to access.

In order to better serve nonprofits and community members, we have partnered/integrated with three major brokerage firms to date: Interactive Brokers, Vanguard, and Folio Institutional. Our supported brokers enable us to help a wide range of clients and cater to most investing needs. For instance, Interactive Brokers is one of the few brokers that support international accounts, and Vanguard is the only firm in our lineup that eliminates the vast majority of all account and trading fees. Folio Institutional has enabled us to launch a feature on our website that allows people and more importantly charitable organizations to sign up for a brokerage account online within minutes. While these accounts through Folio can be used for self-directed investing, we launched this feature to enable our firm to easily manage part of or all of a client’s investment account.

Mechanism 2 - Reducing the Costs of Investing

Antigravity Investments reduces expenses at all levels whenever it is possible to do so without sacrificing quality.

At the organizational level, we operate very leanly and conduct all advising via video calls, phone calls, and email without maintaining a physical office presence. This allows us to reduce costs and scalably service clients around the world.

At the investment management level, we automate different facets of investing like rebalancing and portfolio updates to enable us to implement evidence-based investing practices without high expenditures of staff time.

At the investment fund level, we employ sophisticated technology that lets us lower and in certain cases fully eliminate investment fund costs.

This combination of measures allows us to reduce total investment costs around 50–90% depending on the investment strategy pursued. Because investment fees are typically charged as a percentage of total assets, reducing the costs of investing significantly increases net investment performance, leading to more funding for effective charities.

Mechanism 3 - Improving Investment Performance

Antigravity Investments is an evidence-driven investing firm. We have developed investment approaches that reflect the best research in the industry, and furthermore, we have tailored our offerings to take advantage of the tax-exempt nature of nonprofit and donor-advised fund investing to increase returns.

We believe that bringing more evidence-based investing practices to the EA community can increase expected returns both in terms of absolute returns and risk-adjusted returns relative to how the EA community is currently investing. Additionally, our donor- and nonprofit-centric investing research allows us to achieve superior results when serving the charitable sector compared to alternatives that have not optimized for increasing nonprofit performance.

Getting Started

Contacting Us to Get Started

Any individual or organization can reach out to us via email (support@antigravityinvestments.com) or on our website to get started. You can also reach us via Messenger from our Facebook page.

Services for Individuals

Antigravity Investments provides advising and investment management for individuals. We currently provide advisory services for free as capacity permits. Historically, advisory services have included everything from recommending brokerage firms to researching international tax regulations to increase EA returns. Community members can provide contributions to us if they feel our service provides value. We can also directly manage assets which we typically do for a low fee.

Services for Organizations

Antigravity Investments welcomes the opportunity to assist organizations with investing at every level, from opening a brokerage account to directly managing portfolios. Similarly to our services for individuals, we provide free advising, and contributions are always welcome. We typically charge a below-market rate for directly conducting investment management.

Comments for Individual Investors

This section has an emphasis on U.S. residents. Its general principles are broadly applicable.

DIY Investing

For EAs that are not familiar with investing, for retirement investing, we recommend Vanguard Target-Date Funds which charge 0.15% inclusive of the fees of the underlying funds, which is extremely low. Investing in non-retirement accounts is slightly more complicated. In the most ideal case, we recommend using a simple diversified portfolio with low-cost ETFs and mutual funds in order to minimize fees and utilize the techniques of donating appreciated securities and tax-loss harvesting. We have linked to the Bogleheads wiki which is a reputable source of information on low-cost DIY investing.

Use of Robo-Advisors

We currently do not believe that passive robo-advisors have higher expected returns than target-date funds or simple diversified portfolios. EAs should be aware that for taxable accounts, the vast majority of robo-advisors do not support the donation of appreciated securities which is one of the most tax efficient way to donate. Betterment is an exception but it only supports 12 charities, with AMF and GiveWell being the only two EA charities represented.

Investing Articles for EAs

Brian Tomasik: Advanced Tips on Personal Finance

This is a highly comprehensive article on personal finance with an EA focus. In addition to the great tips presented in this article, we recommend transitioning from a standard savings account to either a high yield savings account or a money market fund for increased yields. The homepage features additional articles on EA investing topics.

Ben Kuhn: Giving away money: a guide

A shorter article on personal finance as it pertains to making large donations.

80,000 Hours: Common investing mistakes in the effective altruism community

This article covers a more advanced approach to passive investing. This involves utilizing an alternative passive portfolio called the global market portfolio, selecting investment funds that use factor-based investing techniques, and even investing on margin. We believe that a global market portfolio offers compelling risk-adjusted returns, although over a long timeframe without leverage, it may generate lower absolute returns compared to a more typical portfolio. 80,000 Hours also mentions factor investing across asset classes, which has a very high potential to significantly improve investment returns, but does not reference how to take advantage of these research findings likely due to their complexity. Antigravity Investments has evaluated this research and we also believe factor-based investing across asset classes can provide significant value. Factor-based asset allocation strategies are for the most part not available to individual investors and charities, falling more into the realm of hedge funds. Antigravity Investments has designed a range of accessible factor-based asset allocation strategies—EAs and EA organizations interested in sophisticated investment approaches with the potential to achieve better absolute and risk-adjusted returns should definitely contact us.

Gordon Irlam: Effective Altruism Investing Strategies

This is a technical article that recommends high EV investing (with significant upside and downside potential) for EA-related investments.