Xantos Labs is an actively-managed investment platform with the goal of outperforming the S&P 500.
Many actively-managed mutual funds have 200+ holdings, and while this provides diversification, it also means that the fund’s returns are strongly correlated with the S&P 500.
Xantos Labs takes a more aggressive approach, limiting its holdings to around 25 at any given time. In addition, Xantos allows you to customize your investing approach based on your risk tolerance.
In this Xantos Labs review, we’ll take an in-depth look at the platform and help you decide if Xantos Labs is right for you.
Xantos Labs offers equity investors the type of strategies found in the institutional and ultra-high-net-worth space. Compared to similar services, the fund's 1% fee is on the low side. While Xantos has a limited track record, the fund has performed well thus far. This includes Q1 of 2020, when the fund limited its losses to 3%, compared to the 20% decline experienced by the S&P 500.
- Available in 150+ countries and multiple currencies.
- Low minimum investment of $500.
- No performance fee on top of 1% annual management fee.
- Limited track record.
- Low total assets under management.
- Taxable accounts only.
- Limited to equities and bonds (no crypto).
Overview of the Xantos Labs Investing Methodology
Xantos Labs was founded in 2016 by Chuk Orakwue, Olamide Harrison and Oladipo Tokunboh. It operated as a private fund for three years, and opened to public investment in 2019. According to a recent SEC filing, the firm’s assets under management (rounded to the nearest $100,000) total just over $2 million.
Xantos Labs Key Facts
- Assets: U.S.-based equities and ETFs.
- Account minimum: $500.
- SIPC insurance: Up to $500,000.
- Account Fees: 1%.
- Assets under management: $2.2 million as of 12/31/21.
Xantos Labs Investment Strategy
While the goal of Xantos Labs’ Core Fund (which is currently the firm’s main fund) is to beat the market, how the company aims to accomplish that can change over time. Their guiding principle is to produce risk-adjusted returns over and above benchmarks like the S&P 500.
In other words, they aim to produce a greater return than you would get from the S&P 500 (and to do so with less risk).
One way they do this is by being very selective about the equities their fund holds. The current holdings of the Xantos Labs Core Fund (as of Feb 1, 2022) — which they define as an all-cap fund — include:
- ASML Holding NV
- Booking Holdings
- CoStar Group Inc
- Freedom Holding
- Lamb Weston
- Medpace Holdings
- Msci Inc
- Thermo Fisher
- Veeva Systems
- Walker & Dunlop
- Waters Corporation
Note: Typically, small-cap stocks are defined as having a market value of less than $2 billion. Freedom Holding Corp. ($3.6 billion) is the lowest market cap stock Xantos currently invests in, making this more of a mid-cap to large-cap strategy fund.
Another way they aim to achieve this is by offering significant downside protection.
When you sign up for Xantos Labs, you’re asked to choose your risk tolerance. Your chosen risk tolerance will determine the allocations in your portfolio.
Go with a conservative allocation and Xantos Labs will allocate your holdings towards sectors like consumer and healthcare, which have traditionally performed better in a down market. More aggressive? Your allocation would have more growth stocks, which offers more potential but carries more risk.
Xantos Labs also adds bond ETFs (with a maximum proportional allocation of 15%) to portfolios of the most conservative investors.
Returns on their most aggressive fund from February 2018 to December 2021 are as follows:
Xantos Labs currently has one fund (their Core Fund), which is customized based on your risk tolerance. In the near future, the company is planning to launch two additional funds, including a dividend-focused equity fund and a growth-focused fund.
Xantos Labs vs. Titan
|Xantos Labs||Titan Invest|
|Fees:||1%||$5 per month for accounts under $10,000 and 1% for accounts above $10,000.|
|Assets under management:||$2.2 million.||$600 million.|
|Types of assets:||Equites.||Equities and crypto.|
|Hedging strategy:||Bond ETFs.||Uses ProShares Short S&P 500 ETF as a hedge. Amount of hedge is based on chosen level of risk tolerance.|
Titan was one of the first consumer-facing investment platforms promising to make hedge fund management strategies available to everyday investors.
Since launching in February 2018, Titan has received over $73 million in funding, including $58 million from A16Z in 2021, which placed its total value at $450 million. Due to its success, it’s no surprise that we’re seeing more funds targeting the same market — one of which is Xantos Labs.
Looking at its total assets under management, Xantos Labs is in the very beginning stages. They also don’t have many of the extra features offered by Titan, such as retirement accounts and multiple portfolio options (although those are in the company’s short-term plans).
As for the investing strategy itself, as discussed in our Titan Invest review, Titan offers four different portfolios:
- Titan Flagship. A large-cap, U.S.-focused growth fund.
- Titan Opportunities. A small-cap, U.S.-focused growth fund.
- Titan Offshore. An international growth fund focused on medium to large companies outside of the U.S.
- Titan Crypto. An actively-managed crypto-only fund.
Similar to Xantos Labs, the goal of each strategy is to outperform its relative benchmark.
A difference in investment strategies between the two companies is their hedging strategy. For conservative investors, Titan will allocate more of your holdings to the ProShares Short S&P 500 ETF, which rises when the market falls. By comparison, Xantos uses a more conservative stock allocation, as well as bond ETFs as an inflation hedge.
Final Thoughts on Xantos Labs
With just $2.2 million under management, Xantos Labs is new to this space. Despite their above-average track record, choosing to invest with Xantos Labs requires being comfortable with where they’re at as a company. So far, they’ve shown some promising results, with risk-adjusted returns above industry competitors and the S&P 500.
While I like the idea that more companies are aiming to provide better products to everyday investors, trying to outperform the market always comes with added risk (as discussed in our guide to investing in individual stocks).
So if you’re investing for retirement, it’s important that you’re not relying on outperformance — which is very difficult to achieve, no matter how advanced the strategy.