The robo advisor industry has been growing over the years. More and more robo advisors have been launched by both startups and the incumbent banks. With 6 different robo advisors that are offering their services in Singapore, the odds of being stuck in a decision dilemma is so real. To help our readers make an informed choice, we are publishing this guide to compare every robo advisor player in the market right now. This guide contains everything you need to know about each robo advisor.
Haven’t heard about robo advisors? Check out Robo-Advising 101: What Is It, Why Use It, Who It’s for, How to Start
Common features amongst robo advisors
Pro: Proprietary algorithm for optimising returns and rebalancing
One of the challenges of investing is the need to invest time and effort into investing. You need to monitor your investments once in a while to check on their performance. In case it hits your targeted selling price, you need to sell some of it away and invest in another share (or cash out). In addition, when the market becomes volatile, you need to review, adjust and optimize your portfolio to make the best of market trends. With robo advisors, all these will be done for you without you lifting a finger. This is a common feature that is offered throughout the industry.
Pro: Investing with a financial goal in mind
Before you even get started with any of the robo advisors, the first thing you need to do is to indicate your investment goal. Are you planning to save for a home down payment in 5 years? Or are you looking to invest for your retirement? Each robo advisor is build to take your investment goal into consideration to better understand your investment needs.
Pro: Low fees
Perhaps the most acclaimed feature of robo advisor (other than its automation) is the low fees. Compared to the traditional fund management industry’s average fee of 2%-2..5% of assets under management (AUM), robo advisors only charge less than 1.5%. Most robo advisors charge less than 1% management fees, except OCBC RoboInvest (for investors with < $50k investment).
|Stash Away||AutoWealth||Smartly||OCBC Robo Invest||CIMB eWealth||UTrade Robo|
|Investment Amt||Fees||Fee Type||Fees||Investment Amt||Fees||Investment Amt||Fees||Investment Amt||Fees||Investment Amt||Fees|
|< S$25k||0.8%||Management fees||0.5%||< S$10k||1%||< S$50k||1.5%||< S$25k||0.80%||< S$50k||0.88%|
|S$25k to S$50k||0.7%||Platform fees||US$18 (~S$25)||S$10k to S$100k||0.7%||> S$50k||1%||S$25k to S$50k||0.70%||S$50k – S$100k||0.68%|
|S$50k to S$100k||0.6%||> S$100k||0.5%||S$50k to S$100k||0.60%||> S$100k||0.50%|
|S$100k to S$250k||0.5%||> S$100k||0.50%|
|S$250k to S$500k||0.4%|
|S$500k to S1M||0.3%|
Con: Lack of transparency
One disadvantage of using robo advisor that is common throughout the industry is the lack of transparency. Once you decide to let the robo advisor invest for you, you have absolutely no say over how the robo advisor does it. The only exceptions are CIMB eWealth and OCBC RoboInvest, where you have more flexibility. Still, you won’t have the privilege of knowing what’s in your portfolio, i.e. the individual components of your portfolio.
Pro: Stashaway’s proprietary long-term investment strategy
ERAA. That is the acronym for Stashaway’s proprietary investment strategy. For those of you who do not know, it stands for Economic Regime-based Asset Allocation. According to Stashaway, ERAA monitors economic trends and valuations. Based on these observations, it makes an informed and intelligent management decision for your investment portfolio.
According to Stashaway, its ERAA adopts a systematic approach towards investing that avoids human biases. Fundamentally, ERAA adopts a long-term view of the market, focusing on solid economic fundamentals. ERAA also deploys a risk shield aspect that responds to abnormal market behaviour when market prices’ moving averages lead to two or more “market deaths”. With ERAA, Stashaway seeks to avoid overvalued investments and focuses on undervalued assets.
Pro: More diversification, less risk
Stashaway builds a portfolio for you by tapping onto 19 differentiated and global asset classes. This includes shares from a variety of sectors from around the world, bonds issued by governments and corporations, and gold. With such a diversified portfolio, you don’t have to worry about sudden drops in any given asset class.
Pro: Strong emphasis on risk management
Stashaway believes strongly in managing risk for its customers, i.e. you. Thus, the first thing that Stashaway does for you is to understand your risk appetite. Stashaway then dynamically maintains your desired risk preference for you by taking the current market condition into consideration. When economic conditions change, your portfolio’s asset allocation will automatically change to maximize your returns while keeping your risk level constant.
Firstly, Stashaway takes risk management so seriously that it has 31 risk profiles to cater to the needs of all types of investors. Secondly, Stashaway comes up with its own risk index, i.e. StashAway Risk Index. StashAway Risk Index is Stashaway’s unique interpretation of the popular risk metric, Value-at-Risk.
Pro: Only robo advisor to adopt fractional shares
Stashaway is one of the few robo advisors in the world to incorporate fractional shares, not just in Singapore. The benefit of fractional shares is that it offers flexibility, precision, diversification, and efficiency to you as an investor.
Here’s how fractional shares can be useful for you as an investor. For example, if you have S$1,000 and intend to invest in a share that costs S$300, you can only buy 3 shares. The remaining S$100 has to be kept in cash or invested in other shares. With fractional shares, it allows you to buy shares down to the precision of 0.0001 piece of a share.
Firstly, fractional shares enable you to be flexible in personalising your portfolio for different investment needs for different investment goals. Secondly, it also ensures that every dollar in your portfolio can be fully utilised for investment. Thirdly, fractional shares provide access to high-priced shares that would otherwise be inaccessible without a large one-time deposit. Lastly, you won’t have to worry about disrupting your portfolio’s allocations when you withdraw your investment.
Pro: Cost effectiveness
Cost is a major factor that determines the overall performance of your investment. The higher the cost, the harder it is for you to outperform the market. Thus, this is the reason why the legendary investor Warren Buffet recommends the average Joe to invest in low-cost exchange-traded funds. Well, if you are looking for a cost-effective option, then AutoWealth stands out as one.
It is an industry norm to offer differing management fee across different robo advisors. However, if you are looking to invest less than S$100,000, AutoWealth has the most competitive rate amongst robo advisors. AutoWealth charges a low fee of 0.5% advisory fee per annum and an additional US$18 platform fee per annum. The only segment that AutoWealth loses out is in the $100,000 segment where its fee is slightly more expensive that Smartly and CIMB eWealth.
Here is how AutoWealth compares against the other robo advisors in terms of fees for the amount invested.
|Amount Invested||Stash Away||AutoWealth||Smartly||CIMB eWealth||OCBC Robo Invest||UTrade Robo|
Pro/Con: Detailed investment goal and risk analysis assessment
Compared to the other robo advisors, AutoWealth has a much more detailed investment goal and risk analysis assessment. Filling in a detailed assessment allows you to better understand your own investment needs as well. However, it also means that the inertia to start investing is higher. You might lose patience and just give up on starting your investment with AutoWealth.
Pro: Conducts regular workshops
Among the robo advisors in Singapore, AutoWealth is the only one that conducts regular workshops to engage its customers. The workshops usually involve discussions on financial topics like general investing and retirement. This is a value-added service that allows you to interact with the AutoWealth team and learn more about personal finance from them.
Pro: Algorithm powered by Nobel prize-winning research
The advantage of robo advisory compared to traditional wealth advisory is the chance to tap on the potential of algorithms. Robo advisors are able to make sharper, smarter, and less emotion-led decision than humans. In that aspect, Smartly brings out the best in the potential of an algorithm to help investors by tapping onto Nobel prize-winning research.
According to Smartly, it uses the Black Litterman model and modern portfolio theory to construct each portfolio. Every portfolio will be customized based on the amount of risk you are willing to accept and the wisdom of the Nobel prize-winning research.
Pro: 11 years’ worth of data for back-testing
The strength of an algorithm doesn’t only depend on the methodology behind it, it also depends on the data that powers it. It is no wonder data is now the new oil, according to analysts. One of the core strengths of Smartly is the amount of data that it has accumulated. With 11 years’ worth of share market data, Smartly is able to do countless back-testing on its strategies. It is also able to find patterns, correlations and relationships between asset classes. This allows Smartly to better optimize your portfolio.
Pro: Passive and highly diversified
While other robo advisors provide portfolio personalisation that is more share-focused, Smartly builds its portfolio primarily using ETFs. Through its research, Smartly selected a basket of 20+ ETFs out of a universe of 1,500+ ETFs. Then, depending on your personal risk appetite, a diversified portfolio will be created for you using this basket of ETFs. This helps you to create a highly diversified and passive portfolio that is able to withstand a multitude of market conditions.
Smartly also ensures that you are invested across a variety of asset classes, not just in shares. Commodities, corporate bonds, government bonds and real estates are other types of asset classes that you can expect to own.
4. OCBC RoboInvest
Pro: More control over investments
Currently, the robo advisors in the market do not allow you to make changes to your own portfolio. Neither do they allow you to decide your own investment theme. You can only trust the robo advisor with your money and hope that they have your best interest in mind.
Unlike the other robo advisors, OCBC RoboInvest allows you to have more control over how your money is invested. OCBC RoboInvest has the option for you to choose your preferred portfolio and investment theme. You can choose from 28 thematic portfolios of equities and exchange-traded funds across six different markets in Asia, Europe and US.
For low-to-medium risk investors, you can opt for “The All Weather” portfolio. “The All Weather” portfolio is designed to perform reasonably well in various economic and inflationary environments. But if you choose to take on a bit more risk, you can be more focused in your investment theme. For example, you can choose to invest in the “Stable Aussie Giants thematic basket”, which focuses on large-cap Australian shares with low volatility.
Con: No extra interest rate bonus on your OCBC 360 savings account
One edge that OCBC RoboInvest has over other robo advisors is the fact that most people would already have a savings account with OCBC. This makes it so convenient to just link your account with OCBC RoboInvest to start your investment. Unfortunately, even if you choose to invest with OCBC RoboInvest, it doesn’t qualify under the Wealth Bonus. This means that OCBC won’t pay you the additional interest rate on your OCBC 360 account.
5. UOB UTrade Robo
Pro: Simple 6-step investment methodology
Although UOB’s UTrade Robo doesn’t have many features that stand out from its peers, it does have a simple and easy-to-understand 6-step investment methodology.
UTrade Robo first identifies the set of major asset classes which are investable, based on your risk profile, risk appetite and financial goal. Then, UTrade Robo selects low-cost ETFs to represent each asset class. Using Modern Portfolio Theory, UTrade Robo will allocate among the chosen asset classes to determine the maximum expected return for a given level of risk. A suitable portfolio will be created for you with your financial goal and risk profile in mind. UTrade Robo will then implement and periodically rebalance the portfolio. As you progress through your goal, it will recalibrate the risk level for your portfolio. Additionally, if you provide updates to your goals or risk profile, the portfolio will also be recalibrated.
6. CIMB eWealth
The edge that CIMB eWealth has over other robo advisors is that it offers both goal investing and thematic investing. Each type of investing comes with its own proprietary methodology to craft the best portfolio for you as an investor.
Pro: CGS-CIMB Quantitative Thematic (CQT) for thematic investing
CIMB eWealth’s CGS-CIMB Quantitative Thematic (CQT) is an investing methodology that it adopts for thematic investing. If you choose thematic investing, you can invest in the right broad opportunities, macroeconomic themes and trends. CIMB eWealth will help you to decide which shares to put into your portfolio with its CQT.
To begin thematic investing with CIMB, you will need to choose from 4 themes: (1) Singapore REITs; (2) US Tech Leaders; (3) HK Property or; (4) Singapore Cash Is King. CIMB eWealth will then identify the investable universe within the theme. After which, CIMB eWealth will rank the shares with quality, value and momentum as criteria using its CQT.
Pro: CGS-CIMB Optimised Risk Premia (CORP) for goal investing
If you prefer goal investing, CIMB eWealth also offers that option. CIMB eWealth’s goal investing helps you to be disciplined and stick to a sustainable investment plan to achieve your goal. CIMB eWealth will help you to decide which shares to put into your portfolio with its CGS-CIMB Optimised Risk Premia (CORP).
The core focus of CORP is on diversification and long-term results. If you choose to invest with the CORP methodology, CIMB eWealth will first review hundreds of ETFs globally to select the best mix for optimal market (Beta) returns. The screening criteria includes (1) AUM > US$ 1B; (2) Trading history > 10 years; (3) Expense ratio < 80th percentile; (4) Historical performance & low tracking error and; (5) Reputable issuer. The chosen ETFs are then used to design 5 different risk profile portfolios for optimum results.