A. General Description of the Company
Composer Technologies Inc. (“Composer” or the “Firm”) was founded in April of 2020 with
headquarters in Toronto, Ontario Canada. As indicated in the Firm’s ADV Part 1A, Composer is
owned by Mr. Ronny Li, Ananda Aisola, Benjamin Rollert as well as three Venture Capital Funds,
First Round Capital, Left Lane Capital and Golden Ventures. The Firm became a registered
investment adviser with the United States Securities and Exchange Commission (“SEC”) in
January of 2021.
B. Summary of Investment Advisory Services
Composer is a registered investment adviser (“RIA”) which offers limited discretionary online
advisory services to its advisory clients (each a “Client,” and collectively, “Clients”) through its
proprietary web-based application (the “Platform”).
Once a Client is approved (an “Investment Account”), the Platform is the only place that a Client
will be able to access Composer’s advisory services. The limited investment advisory services
that Composer provides include making certain risk-ranked model portfolios (“Model Portfolios”)
available for Clients to invest in at their discretion, which are periodically rebalanced to remain
within a target asset allocation range. The Model Portfolios are curated and powered by
Composer’s own quantitative strategies together with inputs from each Client, to help tailor both
“off the shelf” Model Portfolios or more bespoke data-driven Model Portfolios based on different
performance metrics and asset attributes at the Client’s direction. A myriad of components,
including company fundamental and technical analysis, as well as traditional news, alternative
data, macro events, human behavior, sentiment, social attitudes and data technology goes into the
curation of a Model Portfolio. Composer has developed a suite of software tools that effectively
corroborate and calibrate publicly available data that impacts companies, brands, and sectors
across the globe.
The Model Portfolios are comprised of both equity and fixed-income exchange-traded funds
(“ETFs”), as well as equity securities of companies. On the Platform, the Model Portfolios are
referred to as Symphonies (“Symphonies”). While Clients have the option to use the Platform and
invest in one of the Model Portfolios, Clients may also choose to manually add or replace securities
from their chosen Model Portfolios, which will modify the portfolio and these holdings will
become part of any rebalance that occurs in the future, or create their own Model. Clients are able
to back-test their Model Portfolios in order to compare them to a benchmark or another Model
Portfolio, and to see how a particular Model Portfolio hypothetically performs under real-world
conditions. The Client is able to change and edit these Model Portfolios at any time.
Composer’s advisory services include periodic rebalancing of Model Portfolios in accordance with
a particular Model Portfolios default setting, designed to keep the holdings within each Model
Portfolio within a specified target asset allocation range. Once a Client chooses to invest in one
of the Model Portfolios, the Clients will provide and Composer will obtain limited discretionary
authority to automatically rebalance their Model Portfolio holdings, maintain a minimum cash
balance and re-invest dividends. As part of a Client’s ability to make changes to Model Portfolios,
including substituting, swapping or removing securities, Clients also have the ability to manually
select the frequency of rebalancing, and are given the option to rebalance either daily, weekly,
monthly or annually. Clients can also choose to rebalance the portfolio when the value of the
portfolio deviates by a preset threshold. When a Client earns money or makes a deposit, Composer
has the limited
discretionary authority to purchase a combination of ETFs and other securities, as
appropriate, to align the Client’s Investment Account with the target asset allocation for the
selected Model Portfolio(s). Clients may liquidate securities in their Investment Account through
the Platform and initiate cash withdrawals through the Custodian (as defined below). If the
holdings of the Investment Account significantly deviate from the existing or newly selected target
asset allocation, Composer will initiate a rebalancing to bring the holdings within the acceptable
range of the target asset allocation.
The limited discretionary authority provided by Clients to Composer to rebalance Model Portfolios
is not limited to the number or frequency of rebalances and is driven by Composer’s decisions on
the composition and holdings in their selected Model Portfolio. For example, Composer may sell
overrepresented ETFs and use the proceeds to buy underrepresented ETFs to bring portfolios
towards its target asset allocation without taking into account individual tax consequences or
market circumstances. Composer will not engage in tax loss harvesting trades in order to optimize
the tax consequences of holding, or disposing of, certain holdings.
The ETF or single stock shares purchased or sold on behalf of a Client and/or held in Client
Investment Accounts may be either whole shares or fractional shares, depending upon how much
a Client invests in the particular security. Composer enables dollar-based investing, which means
a Client can buy a fixed dollar amount rather than whole shares. Thereafter, Composer allocates
the fractional shares to the individual Client’s Investment Account. Fractional shares, however,
are typically not transferable outside of a Client’s Investment Account because the financial system
in the United States currently is structured only to accommodate transfers of full shares. As a result,
fractional shares may not be marketable or transferrable to another brokerage account.In the event
of a liquidation or transfer of the assets in a Client’s Investment Account to another account at
another institution, Composer may convert such fractional shares to cash.
Composer does not provide Clients with financial planning and Composer’s investment advice
and services are limited to providing and rebalancing the Model Portfolios and the ability for
Clients to customize and make modifications to the Model Portfolios.
The investments in each Client’s Investment Account are held in a separate account in the name
of the Client by an independent qualified custodian (the “Custodian”), and not with Composer.
All Investment Accounts managed through the Platform are required to use the Custodian selected
by Composer as the independent custodian. In addition to holding cash and securities for Clients,
the Custodian will also facilitate the execution, clearance and settlement of all Client orders, and
will provide standard account services such as trade reporting, recordkeeping, and periodic account
reports or summaries. Please see Item 12 for more information on Composer’s use and selection
of Custodians.
C. Tailored Services and Investment Restrictions
Clients will receive the Investment Advisory Agreement, which further details the services Clients
will receive, fees charged to Clients, and the conditions of Composer-Client relationship.
Importantly, Composer does not provide overall financial planning services, nor does it provide
tax advice.
D. Wrap Fee Programs
Composer does not participate in wrap fee programs.
E. Amounts Under Management
As of December 31, 2023, Composer managed approximately $46,700,000 in discretionary
regulatory assets under management across 2948 discretionary Client Accounts.