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Robo-advisory platforms have become a popular investing solution. Unlike more traditional investment solutions, robo-advisor platforms excel in providing digital tools that enable online account opening, attentive customer support, as well as understanding our online risk assessment to customise investment advice.
Robo-advisors are also evolving in the types of services they are offering beyond just managed portfolios. Firstly, banks such as DBS, OCBC and UOB all offer their own robo-advisory platforms. This means we don’t even need to start a new account to invest via a robo-advisory solution.
Today, almost every robo-advisor also provides cash management accounts, a way for us to boost returns from cash savings through money market funds and short-term bonds. Platforms such as iFast (FSM MAPS) and Syfe Trade also enable low-cost stock trading with a brokerage account. Endowus and Kristal.AI have personalised investment solutions for high-net-worth clients. MoneyOwl doesn’t just provide investment solutions, but also comprehensive insurance and wills writing solutions for its clients.
Depending on our needs, there are more than 12 robo-advisor platforms in Singapore, we can invest with.
Read Also: Complete Guide To Cash Management Accounts In Singapore
Contents
What Are The Robo Advisor Platforms Available To Singapore Investors?
Investment in Unit Trusts
#1 Endowus
#2 MoneyOwl
Investment in ETFs
#3 DBS digiPortfolio
#4 AutoWealth
#5 StashAway
#6 Syfe
#7 UOBAM Invest
#8 UTrade Robo (UOB Kay Hian)
#9 FSM MAPS
#10 Kristal.AI
#11 SaxoWealthCare
Investment in Individual Stocks and ETFs
#12 OCBC RoboInvest
Comparison Based On The Amount Invested, And The Fees Charged
Pros And Cons Of Investing With A Robo Advisor
Try A Robo-Advisor For Yourself
What Is A Robo Advisor?
The term “robo advisor” is commonly used to describe digital wealth management platforms that utilise automated solutions and algorithms to help us invest and manage our money. By doing this, robo-advisors can greatly reduce the number of human advisors they employ, while delivering high-quality and more consistent investment advice to investors, and are able to scale up operations efficiently.
Robo advisor platforms also make use of digital tools to improve customer experience. We enjoy a paperless and hassle-free online account opening experience from the comfort of our homes. When onboarding clients, digital tools are used to conduct online risk assessments and provide personalised investment advice and solutions. Many robo-advisor platforms also deliver extensive educational content as well as regularly host online and offline educational events for their community.
Similar to mutual funds and ETFs, robo-advisor platforms pool together funds from many smaller investors to create a large and diversified portfolio. This helps smaller investors incur lower sales charges and achieve diversification even if we only invest a small sum of money. In addition, investors can take a passive approach in managing our investments, as well as leverage on digital tools to set investment goals.
What typically differentiates robo-advisory platforms is their investing methodology or philosophy, which is why we should take the time to understand how the robo advisor is investing our money. Increasingly, the types of solutions offered by robo-advisors also distinguish them from one another. While robo-advisor platforms use algorithms to invest our funds, they are ultimately programmed by humans based on financial models and follow a set of rules and instructions.
However, this also means that robo-advisors are participating in the same financial markets and investing in the same asset classes – usually stocks, bonds and money market funds – as regular investors and fund managers. Thus, we will have a realistic expectation of the kind of returns we will receive (and risks we take on).
What Are The Robo Advisor Platforms Available To Singapore Investors?
| No. | Robo-Advisor Platform | Minimum Investment | Yearly Advisor Fees |
| Investments In unit trusts (for main portfolio) | |||
| 1 | Endowus | $1,000 | – 0.25% to 0.6% (cash investments in Core, Income and Satellite portfolios) – 0.4% (CPF and SRS investments in Core, Income and Satellite portfolios) – 0.3% (Cash, CPF and SRS via Fund Smart portfolios) – 0.05% (Cash Management) |
| 2 | MoneyOwl | From – $50 to $100 (per month) – $100 to $1,000 (lump sum) |
– 0.5% to 0.6% (Dimensional portfolio) – 0.5% to 0.6% (WiseIncome portfolio) – 0% (WiseSaver – cash management) – 0% (CPF portfolio promo rate) |
| Investments In ETFs | |||
| 3 | DBS digiPortfolio | $1,000 to US$1,000 | 0.75% |
| 4 | AutoWealth | $3,000 | – 0.5% – USD$18 (platform fee) |
| 5 | StashAway | None (Income portfolio: $10,000) | 0.2% to 0.8% |
| 6 | Syfe | None | 0.35% to 0.65% |
| 7 | UOBAM Invest | None | 0.6% to 0.8% |
| 8 | UTrade Robo (UOB Kay Hian) | $5,000 | 0.5% to 0.88% |
| 9 | FSM MAPS | $500 (per month) $1,000 (lump sum) |
– 0.35% (Conservative portfolio) – 0.5% (Other portfolios) |
| 10 | Kristal.AI | None | – 0% (US$10,000 and below) – 0.3% (Above US$10,000) |
| 11 | SaxoWealthCare | $3,000 | 0.45 to 0.75% |
| Investments In Individual Stocks And ETFs | |||
| 12 | OCBC RoboInvest | From US$100 to HK$350,000 | 0.88% |
Investments In Funds
As you can see, even between robo-advisor platforms, there are different investment methodologies and costs also vary. Below is more detailed information on each of the robo-advisor platforms in Singapore.
#1 Endowus
Portfolios:
- Endowus Core
- Endowus Income
- Endowus Satellite
- Endowus Cash Smart (Cash Management portfolio)
- Endowus Fund Smart (Design your own customised portfolios)
- Private Wealth (tailored for high net worth clients)
Advisor Fees:
- 0.25% p.a. to 0.6% p.a. (investing cash in Endowus Core, Satellite, Income)
- Up to $200,000 – 0.6%
- $200,000 to $1 million – 0.5%
- $1 million to $5 million – 0.35%
- $5 million and above – 0.25%
- 0.4% p.a. (investing CPF and SRS in Endowus Core, Satellite, Income)
- 0.3% (investing cash, CPF and SRS in Fund Smart)
- 0.05% (investing cash and SRS in Cash management portfolio)
Minimum Investment Amount: $1,000 (across all portfolios); $10,000 if you want to invest in its Income Portfolios
Endowus is an independent fee-only wealth advisor, providing high-quality financial advice and creating personalised asset allocation and portfolio for investors. Endowus’ approach is to select the best-in-class funds, while building a globally-diversified and low-cost portfolio for investors.
It offers retail investors access to institutional share classes, which were never previously within reach, on funds offered by world-renowned global investment management companies, such as Dimensional Fund Advisory, PIMCO, First State Investments, Eastspring Investments, Vanguard, Schroders and others.
Besides its Endowus Core portfolio with cash, Endowus also offers investments funded by CPF or SRS monies. Endowus also has a cash management account, Endowus Cash Smart to boost returns on your cash savings.
Endowus Fund Smart was launched to help investors custom-design your own ideal investment portfolios. With Endowus Fund Smart, investors can choose from a curated list of more than 200 funds that have already been identified as best-in-class by its team while automatically accessing the institutional share class.
Endowus also launched its ESG portfolio, built with the best ESG, sustainable and climate funds from both equity and fixed income funds from top ESG managers. There is also Endowus Satellite portfolios that you can invest in for exposure to selected themes or market opportunities. As its name suggests, this is to complement your main portfolio rather than be your main portfolio.
Read Also: How The Endowus ESG Portfolios Can Help You Get Exposure In ESG Investments
Endowus also has a personalised investment service for its high net worth clients who invest more than $1 million with them.
Invest Better With Endowus
If you’re interested to start investing with Endowus, you’ll be happy to know that DollarsAndSense readers can enjoy $20 off their access fee (equivalent to $10,000 advised free, assuming an access fee of 0.40%). Sign-up using this link to claim this special offer. Terms & Conditions apply.
#2 MoneyOwl
Portfolios:
- Dimensional portfolio
- WiseIncome (Income portfolio)
- WiseSaver (Cash Management portfolio)
Advisor Fees:
- Dimensional portfolio:
- 0.6% p.a. (up to $100,000)
- 0.5% p.a. (Above $100,000)
- WiseIncome:
- 0.6% p.a. (up to $100,000)
- 0.5% p.a. (Above $100,000)
- WiseSaver: 0%
- CPF portfolio 0.4% (since its launch)
Minimum Investment Amount:
- Dimensional portfolio:
- $50 (per month)
- $100 (Lump sum)
- WiseIncome:
- $100 (per month)
- $1,000 (lump sum)
- WiseSaver: $10
- CPF portfolio
- $200 (per month)
- $1,000 (lump sum)
MoneyOwl is a social enterprise by NTUC Enterprise. MoneyOwl incorporates advice from both humans and robots to deliver low-cost investment solutions to its clients.
Its Dimensional portfolio currently offers 5 investment profiles – Equity, Growth, Balanced, Moderate and Conservative – which are created through different combinations of 4 globally diversified Dimensional equity and bond funds, determined based on investors’ risk appetite.
It also has an income portfolio – Fullerton MoneyOwl WiseIncome – for investors who prefer to see cash flow coming in from their investments. This can supplement your payouts from CPF LIFE in your golden years by withdrawing returns and capital, or you could also choose to reinvest returns to compound your portfolio. WiseIncome is invested in global equiries, S-REITs, Asian Fixed Income and US/Singapore bonds.
MoneyOwl’s WiseSaver is its cash management account.
MoneyOwl also enables investors to invest your CPF funds. They offer three CPF portfolios, CPF Balanced, CPF Growth and CPF Equity, with differing allocations to equities and bonds. Its CPF portfolios invest in two funds: LionGlobal Infinity Global Stock Index Fund Share Class C (for equities exposure) and UOBAM United SGD Fund Share Class D (for bonds exposure).
MoneyOwl doesn’t just provide investment solutions either, offering comprehensive financial advisory for insurance and wills writing.
Read Also: Investing With MoneyOwl: Here’s What You Need To Know Before You Invest With Them
Investments In ETFs
#3 DBS digiPortfolio
Portfolios:
- Global Portfolio
- Asia Portfolio
- Income Portfolio
- SaveUp Portfolio
Advisor Fees:
- Global Portfolios
- Global portfolio (ETF) (0.75%)
- Global Portfolio (Unit Trust) (0.75%)
- Global Portfolio Plus (Unit Trust) (0.75% to 0.85% based on portfolio)
- Asia Portfolio (ETF) (0.75%)
- Income Portfolio (Unit Trust) (0.75%)
- SaveUp Portfolio (0.25%)
Minimum Investment Amount:
- Global Portfolios
- Global portfolio (ETF) (US$1,000)
- Global Portfolio (Unit Trust) (US$1,000 or S$1,000)
- Global Portfolio Plus (Unit Trust) (US$10,000 or S$10,000)
- Asia Portfolio (ETF) (S$1,000)
- Income Portfolio (Unit Trust) (US$1,000 or S$1,000)
- SaveUp Portfolio (S$100)
DBS digiPortfolio provides investors with four portfolios – Global Portfolios, Asia Portfolio, Income Portfolio and SaveUp – consisting of the best funds from DBS’ platform. Its Global Portfolio offers three investments: 1) Global Portfolio (ETF) comprised of UK-listed ETFs; 2) Global Portfolio (Unit Trust) comprised of 4 to 6 unit trusts; and 3) Global Portfolio Plus comprised of 8 to 10 unit trusts and is adjusted tactically to capitalise on market movements.
Its Asia Portfolio offers three portfolios based on your risk appetite: Slow n Steady; Comfy Cruisin; and Fast n Furious. This portfolio is be made up of Singapore-listed ETFs that invest across Asia with Asian exposure.
The Income Portfolio has both equity and bonds exposure, with an aim to generate a payout of 4% per annum.
DBS digiPortfolio’s SaveUp portfolio is meant for risk-averse investors who have lower risk appetite and prefer returns to have lower volatility.
As its portfolios may be purchased in SGD and USD, customers are required to also open a Multi-Currency Account with DBS. This can include the popular DBS Multiplier Account, My Account, eMulti-Currency Autosave (eMCA), eMulti-Currency Autosave Plus (EMCA+) or Multi-Currency Autosave Plus. This is one of the benefits of investing with a bank’s robo-advisory, as we can also use its other services.
Another benefit of using a bank-led robo-advisory solution is that benefits may span across its solutions as well. For example, when you invest at least S$1,000 with DBS digiPortfolio, you can boost your interest return on cash holdings in your DBS Multiplier Account up to 3.5%.
Apart from its 0.75% to 0.85% advisor fee, there are no other sales charges, platform fees, or switching fees.
Read Also: Investors In Singapore: What Is SIP Accreditation And Should You Get It?
#4 AutoWealth
Portfolio:
- AutoWealth: Globally diversified stocks and government bonds
- AutoWealth Plus+: Thematic portfolios that aims for sustainable long- run above-market returns
Minimum Investment Amount:
- AutoWealth: $3,000
- AutoWealth Plus+: $10,000
Advisor Fees:
- 0.5% p.a. (Management fee)
- USD$18 p.a. (Platform fee)
AutoWealth is a simple and easy-to-understand robo-advisory solution. It primary AutoWealth portfolio comprise a mix of stocks and government bonds spanning U.S., Europe and Asia Pacific. The AutoWealth portfolio tracks the MSCI All-Country World Index and the FTSE World Government Bond Index, with ETFs listed on the New York Stock Exchange (NYSE) and NASDAQ.
AutoWealth has also launched its AutoWealth Plus+ portfolio enabling you to gain exposure to a thematic portfolio that you may want greater exposure to. It currently offers five thematic portfolios:
1) The Future of New Economies portfolio: with greater emphasis on exposure to China, Taiwan, India and South Korea
2) Future 2050 portfolio: to gain exposure to futuristic multidecade macro trends, such as technology and healthcare
3) Future of Digital Economy portfolio: providing greater allocation to Fintech, Internet and E-commerce companies
4) Growth & Momentum portfolio: invest in growth and momentum companies with favourable multi-factor characteristics backed by rigorous and well-established empirical studies
5) Pandemic Turnaround portfolio: gain exposure to sectors that are temporarily depressed or likely to benefit from the pandemic, including consumer discretionary, lithium, clean energy, aerospace & home construction companies
AutoWealth also assigns clients a wealth manager who is readily available via whatsapp. AutoWealth’s fees are also structured slightly differently from other robo advisors, with both a management fee of 0.5% p.a. and an annual platform fee of USD$18.
Read Also: Step-By-Step Guide To Opening An AutoWealth Account For New Singapore Investors
Invest with AutoWealth Today
Sign up with AutoWealth and use the promo code ‘DollarsAndSense‘ to receive a $20 top-up into your account once you fund it with the $3,000 minimum!
#5 StashAway
Portfolios:
- General Investing
- General Investing Powered by StashAway
- General Investing Powered by BlackRock
- Responsible investing with ESG
- Thematic portfolios
- Flexible portfolio
- Income portfolios
- Invest your SRS
- StashAway Simple (Cash Management portfolio)
- StashAway Simple
- StashAway Simple Plus
- StashAway Reserve (for Accredited Investors)
Minimum Investment Amount:
- General Investing: none
- Income portfolio: $10,000
- StashAway Simple: none
Advisor Fees:
- Goal-based and income portfolios:
- First $25,000 – 0.8%
- Additional amounts above $25,000 to $50,000 – 0.7%
- Additional amounts above $50,000 to $100,000 – 0.6%
- Additional amounts above $100,000 to $250,000 – 0.5%
- Additional amounts above $250,000 to $500,000 – 0.4%
- Additional amounts above $500,000 to $1 million – 0.3%
- Additional amounts above $1 million – 0.2%
- StashAway Simple: 0%
StashAway employs a proprietary investment strategy they call Economic Regime-based Asset Allocation (ERAA), based on the theory of economic cycles. Through monitoring changing economic indicators, they rebalance the asset allocation mix of customers’ portfolios accordingly.
Recently, StashAway has introduced a General Investing portfolio powered by BlackRock. This solution enables investors to leverage on insights and asset allocation guidance by BlackRock, based on four risk levels, while StashAway takes care of the trades and servicing aspect.
They also provide private equity and venture capital investing through its StashAway Reserve portfolio, for accredited investors.
You can also invest your Supplementary Retirement Scheme (SRS) funds via StashAway, as well as invest in its Singapore-focused income portfolio, comprising the STI ETF, Singapore government bonds ETF, corporate bond ETFs, REITs ETFs. StashAway also offers thematic portfolios, such as Technology Enablers, The Future of Consumer Technology, Healthcare Innovation and Environment and Cleantech.
Read Also: StashAway Income Portfolio: How You Can Get 3.75% Dividends From your Investments Each Year
For greater control over your portfolio, you can utilise StashAway’s Flexible portfolios to build a customised investment portfolio. You can choose to invest in ETFs provided by some of the world’s top fund managers, including iShares (by BlackRock), Vanguard, SPDR, Ark Invest and more.
StashAway also offers StashAway Simple and StashAway Simple Plus, their cash management accounts. StashAway Simple does not charge a management fee and rebates the trailer fees it receives from the underlying funds. StashAway Simple has a projected return rate of 1.9% p.a and StashAway Simple Plus has a projected return rate of 2.7% to 3.3% p.a. Given the higher projected return, we should expect to take on slightly higher risk when investing in StashAway Simple Plus.
Enjoy 50% Management Fees For 6 Months With StashAway
For those who are interested to try the StashAway platform for yourself, StashAway is giving 50% off in management fees for 6 months, for up to $50,000 in portfolio value.
That makes it perfect for giving StashAway a try and see if it is the robo-advisor for you. You can sign-up for free today to enjoy this exclusive promotion.
Read Also: Supplementary Retirement Scheme – 4 Things You Need To Understand Before Opening An SRS Account
#6 Syfe
Portfolios:
- Core portfolios
- Core Equity100
- Core Growth
- Core Balanced
- Core Defensive
- Satellite portfolios
- REIT portfolio: REIT+
- Themes
- ESG & Clean Energy
- Disruptive Technology
- Healthcare Innovation
- China Growth
- Global Income
- Custom portfolio
- Cash portfolios (cash management account)
- Cash+
Minimum Investment Amount: None
Advisor Fees: 0.4% p.a. to 0.65% p.a.
- $20,000 and below: 0.65% p.a.
- Above $20,000: 0.5% p.a.
- Above $100,000: 0.4% p.a.
- Above $500,000: 0.35%
Syfe uses an Automated Risk-managed Investments (ARI) strategy, their proprietary investment methodology, which automatically adjusts your portfolio to ensure enhanced risk-adjusted returns by managing your portfolio’s downside risk.
Unlike many other robo advisors, Syfe’s portfolio is diversified into not just equities and bonds, but commodities as well. It does so via ETFs listed on the US stock exchange.
Read Also: Investing With Syfe: 5 Things You Need To Know About Singapore’s Newest Robo-Advisor
Complementing its Core portfolios, Syfe also enables investors to build satellite portfolio, including Syfe REIT+ and thematic portfolios, to give users more investment choices. In addition, Syfe also has its cash management account, Syfe Cash+. Syfe also enables investors to invest in customised portfolios you build on your own.
Most recently, Syfe also launched Syfe Trade – a brokerage service for you to buys and sell U.S. stocks. Syfe Trade offers up to five free trades a month and gives you the option to purchase fractional shares in over 10,000 U.S. stocks and ETFs for as little as $1.
If you are interested to get started on investing with Syfe, DollarsAndSense has an exclusive partnership with Syfe – enjoy 0% management fee for the first $30,000 during the first 6 months after you sign up. Apply here to enjoy the promotion.
#7 UOBAM Invest
Portfolios:
- Core
- Satellite
- Fund Direct
Minimum Investment Amount: $1
Advisor Fees: 0.6% p.a. to 0.8% p.a.
- $25,000 and below: 0.8% p.a.
- Above $25,000: 0.6% p.a.
Launched by UOB Asset Management, UOBAM Invest employs a Glide-path model to gradually allocate funds towards safer assets as investors move closer to their target goal completion date. UOBAM Invest has recently updated its solution to three distinct products: Core portfolio, Satellite portfolio and Fund Direct.
In its Core portfolio, you can invest in a guided portfolio. Its Satellite portfolio allows you to explore a DIY method to building your portfolio based on investing trends. Via the UOBAM Invest app, you also have access to Fund Direct, where you can also buy funds directly.
#7 UTrade Robo (UOB Kay Hian)
Portfolio: Global Multi Asset Portfolio
Minimum Investment Amount: $5,000 per portfolio (minimum subsequent invest is $500)
Advisor Fees: 0.5% p.a. to 0.88% p.a.
- $50,000 and Below: 0.88%
- Above $50,000: 0.68%
- Above $100,000: 0.5%
UOB Kay Hian’s UTrade Robo invests in multi-assets, including stocks, bonds and commodities, as well as globally diversified portfolios. It selects low-cost ETFs listed globally to represent each asset class.
On its website, UTrade Robo states that it utilises the Modern Portfolio Theory to allocate among asset classes to determine the maximum expected returns for a given level of risk.
While it has a minimum investment amount of $5,000 per portfolio, subsequent top-ups of investments can be made with a minimum amount of $500.
#9 FSM MAPS
Portfolios: Globally diversified portfolios, customised into 5 income and 5 growth portfolios, depending on an investors risk appetite
Minimum Investment Amount:
- $500 (Lump Sum)
- $100 (Regular Savings Plan)
Advisor Fees:
- 0.0875% (Conservative portfolio)
- 0.125% (Other portfolios)
FSM Managed Portfolio, or FSM MAPS, doesn’t completely leave the analysis and investment decisions to a predetermined algorithm. Rather, its portfolio managers and research analysts study the markets and products available in the market to gain the exposure they desire.
It offers 10 portfolios straddling either Income or Growth investment objective, varying on five risk profiles, from Conservative to Aggressive. Investors have to start with a minimum of $100 for its Regular Savings Plan and $500 for a lump sum investment.
Read Also: What Are The Pros And Cons Of Investing Using A Regular Savings Plan (RSP)
#10 Kristal.AI
Portfolios: Kristal Freedom (5 thematic portfolios)
Minimum Investment Amount: None
Advisor Fees:
- Under $10,000: 0% p.a.
- Above $10,000: 0.3%
Kristal.AI offers two types of account – i) Freedom for all investors and ii) Private Wealth for Accredited Investors only. For Kristal’s Freedom portfolio, you can invest in five thematic investments and automated portfolios:
1) Kristal High Growth: Ideal for high-risk investors focused on aggressive capital appreciation over a longer period.
2) Kristal Growth: Ideal for medium-risk investors focused on both safety and capital appreciation over a longer period.
3) Kristal Secure: Ideal for low-risk investors focused on safety and expecting slightly higher alpha over traditional deposits.
4) Kristal Balanced: Ideal for low to medium-risk investors focused on both safety and capital appreciation over a longer period.
5) Kristal All Weather US: Ideal for investors looking to gain a diversified exposure to various asset classes with the objective of balanced growth.
Quite uniquely, Kristal charges no fees for investors with under US$10,000 invested, and only starts charging a 0.3% management fee on incremental amounts when your account value increases to more than US$10,000. Unlike other robo-advisors, Kristal also charges investors a brokerage and other charges at the actual values.
#11 SaxoWealthCare (Saxo Markets)
Portfolio Styles:
- Global Growth,
- Asian Growth
- Sustainable Growth
Minimum Investment Amount: $3,000
Advisor Fees:
- First $50,000 – 0.75%
- Next $50,000 – 0.70%
- Next $100,000 – 0.60%
- Next $800,000 – 0.55%
- Above $1 million – 0.45%
In 2022, Saxo Markets introduced SaxoWealthCare, billing it as the first 5th -generation digital wealth manager in Singapore.
Customers will be led through three stages when designing their portfolio, starting with identifying their risk profile. At this stage, customers can also choose to enable the Portfolio Protector feature, which acts as an added safeguard against market volatility. It will activate when the portfolio value drops to a pre-set threshold and switch to being a minimal-risk investment with a higher bond allocation.
The platform invests in a combination of stock and bond ETFs based on a choice of three trading styles, namely, Global growth, Asian growth, and Sustainable growth. The platform also allows for multiple goal settings and regular investment contributions for the investor to reach their target goal.
Investments In Individual Stocks And ETFs
#12 OCBC RoboInvest
Portfolios: 37 thematic portfolios across 6 markets
Minimum Investment Amount: US$100 to HK$350,000 ($137 to $61,700)
Advisor Fees: 0.88% p.a.
OCBC RoboInvest It offers a diverse selection of 37 thematic portfolios across six risk tolerance levels for its investors. Uniquely, it is the only platform offering the ability to get invested into individual stocks within the themes we select.
Its minimum investment amount starts from US$100 which is offered for several portfolios. However, the minimum investment amount can go up to several thousand dollars, typically under US$5,000, depending on the portfolio investors choose. On a Hong Kong-focused tech portfolio, we found that it required a minimum investment of HK$350,000, which amounts to nearly $60,000.
Investors can choose a lump sum investment or monthly investments that are only available for selected portfolios.
OCBC RoboInvest also charges its investors exchange-related fees and charges incurred when buying and selling the portfolios.
How Robo Advisors In Singapore Typically Work
Each platform has its own unique ways of offering a robo advisor financial service, but the broad overview is the same:
Step 1: Sign-up and answer a detailed questionnaire about your risk appetite and intended investment time horizon.
Step 2: Fund your account, either on a lump sum or monthly basis.
Step 3: Upon receiving your funds, your robo advisor will then purchase a mix of ETFs (and if applicable, other assets) that corresponds to what they consider “optimal” based on your profile and the current market conditions.
Step 4: The robo advisor will monitor the market and perform rebalancing when necessary to manage risk and maximise potential returns.
As far as we can tell, all of the robo advisors make the majority of their investments in US and global ETFs with exposure to a variety of asset classes including equities, bonds, gold and other commodities.
We typically also incur additional fees for trading/clearing investments.
Pros And Cons Of Investing With A Robo Advisor
Pro #1: You Don’t Need a Large Amount of Capital
When investing as an individual, there are minimum trade sizes and high transaction costs imposed on the account, and this makes investing as an individual cost-prohibitive. Robo advisors allow you to own fractional portions of ETFs, which is impossible to do on your own unless you have a large capital.
Pro #2: Diversification
Because of the scale that technology enables, robo advisors can offer detailed monitoring of market indicators and apply sophisticated investment strategies based on them, much like what mutual funds provide, but at lower cost.
Pro #3: Personalised Portfolio
Rather than needing to pick from a list of mutual funds that you think best fit your needs, robo advisors can give you a portfolio mix that is more finely tuned to your needs (as the robo advisor deems to be appropriate), though not completely personalised on an individual level.
Pro #4: Passive Approach
The idea with robo advisors is that you do not need to rebalance your portfolio as market conditions change. Rebalancing is done by robo advisors for you, automatically.
Read Also: 3 Important Differences Of Automated Investing From Traditional Investing
Pro #5: “Low Fees”
Robo advisors generally charge lower annual management fees than professionally managed funds do. We all know that fees have a compounding effect that eats into our returns, especially over the long term. The higher the fees, the less returns we enjoy for the same amount invested and asset performance.
This point about “low fees” does come with a caveat. While robo advisor fees are admittedly lower than what mutual funds charge, it is still an additional cost that you are incurring, as opposed to buying the ETFs yourself and managing your own portfolio. So you need to decide if the value robo advisors provide is worth the fees you pay, over the long-term.
Con #1: Letting Emotions Get In The Way
Even though you automate the investment process, your emotions can still sway your decisions. This means panic selling during a downturn or making the decision to sell after an upswing in the markets.
Con #2: Forgetting Your Long-Term Investment Needs
Because you automate your investments, you may think it is well taken care of. However, you may forget to increase your investment size as you progress in your career and earn more or when you have more children.
Con #3: Currency Exchange Spread and Risk
Typically, in Singapore right now, robo advisors tend to be heavily invested in US-based ETFs. This means your money will be subject to USD conversions at spot rates, as well as incurring currency conversion fees charged by brokers.
Con #4: The Fees
It might be ironic to say that the fees are a reason not to use robo advisors, since they are one of the draws. However, as mentioned earlier, robo advisor fees are recurring costs, which are on top of underlying fund-level fees or Total Expense Ratio (TER) that may also be charged. Finally, as mentioned, there is a currency conversion fee you also need to be aware of.
If you like the benefits of what ETFs offer and are willing to put in some time and effort to do-in-yourself, then you would be able to save quite a bit, especially over the longer-term. So you need to evaluate if you really need a “purely passive” option that robo advisors provide, or can spare some time to periodically review and manage your portfolio.
Read Also: Fund Management Costs: 3 Ways Your Returns Are Being Eroded By “Hidden” Charges
Con #5: Lack of Flexibility
The whole idea of robo advisors is that you take the emotion out of investing, and that they help you to make “smart” choices based on their algorithms. However, what happens when you do not agree with the choices made by the robo advisor?
If you have a particular opinion or insight that you think isn’t picked up on by the robo advisor, then you might want to give them a miss. Also, you cannot choose a specific ETF to include (or exclude), which can be irritating, since a portion of your money is deployed in something you do not believe in.
Con #6: Tax On Dividends
Many of these robo advisors buy ETFs listed in the US, your dividends are subject to a 30% dividend withholding tax. What that means is that your dividend returns are lesser compared to buying ETFs listed elsewhere. It is unclear whether the robo advisors take this 30% dividend tax into account when doing their projections.
Try A Robo-Advisor For Yourself
Since it doesn’t cost you anything to register and tinker around with the platforms, you should do it and see for yourself how robo-advisors allow you to easily set your risk profile, get insights into your portfolio, and project your investment returns.
If you’d like to try a robo-advisor for yourself, DollarsAndSense has partnered with Endowus, StashAway, AutoWealth and Syfe to give you a headstart on your robo-investing journey.
Endowus is offering DollarsAndSense readers $20 off their access fee. Sign-up using this link to claim this special offer. Terms & Conditions apply.
StashAway is giving 50% off in management fees for 6 months, for up to $50,000 in portfolio value. That makes it perfect for taking StashAway on a test drive to see if it is the robo-advisor for you. You can also start investing your SRS funds with StashAway to start growing your retirement nest egg today. You can sign-up for free today at this link.
Sign up with AutoWealth and use the promo code ‘DollarsAndSense‘ to receive a $20 top-up into your account once you fund it with the $3,000 minimum. Once you do so, let us know what you think.
If you are interested to get started on investing with Syfe, DollarsAndSense has an exclusive partnership with Syfe – enjoy 0% management fee for the first $30,000 during the first 6 months after you sign up. Apply here to enjoy the promotion.
This article was first published on 2 March 2018 and has been updated to include the latest information. Additional Reporting by Shashi Kumar.
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